People wait in line at an exchange shop in Beirut. (Credit: Philippe Hage Boutros/L'Orient-Le Jour)
Many banks have not yet begun to increase the ceilings applicable to converting Lebanese lira into “fresh” dollars at the Sayrafa platform rate — LL38,000 to the dollar against nearly LL44,000 last night on the parallel market — in accordance with the measure announced Tuesday by the Banque Du Liban. This situation seems to have pushed BDL, which operates the Sayrafa platform, to take the lead.
In a new statement issued Wednesday — its third in 24 hours — BDL called on depositors whose banks have not yet begun to apply the new measures to have them implemented at one of Al-Mawarid Bank’s 19 branches in the country, even if they are not its customers.
“All citizens can go to any AM Bank branch to perform these transactions; this bank has agreed to implement them,” BDL stated.
The CEO of AM Bank confirmed to L’Orient-Le Jour that he “accepted” BDL’s request, stating that the operational branches of the bank will be ready to accommodate all individuals who could not perform the desired transactions with their own banks.
AM Bank then issued a statement early Wednesday evening in which it added that its branches will open their doors Dec. 31, Jan. 1 and Jan. 2, despite those days being official holidays. The branches will be open until 5:00 p.m., as BDL requested of all banks on Tuesday.
‘Priority to our customers’
“Priority will be given to our customers, but those of other banks will also be served,” AM Bank CEO, Marwan Kheireddine, told L’Orient-Le Jour.
“It is a short-term measure even if no deadline is set for the moment for transactions related to Sayrafa. We realize that our initiative may attract many Lebanese to our branches, but we hope that other banks will quickly update their procedures,” he added.
Also early Wednesday evening, another Lebanese bank, Middle East & Africa Bank, indicated that it had started to implement these guidelines. In a statement, the bank said it would “immediately” implement the measure adopted by BDL on Dec. 27 in all its 10 branches across Lebanon. However, MEAB did not indicate whether it would also open its doors over the New Year’s weekend.
A source at BLOM Bank, who was not authorized to speak to the press, said that the bank, one of the largest in the country, had “already started to process requests from companies to convert at Sayrafa rates.” He added that these transactions were “without a ceiling,” but had to be justified by the necessity to “finance the company’s needs.”
Individuals will be included in the new measures as of Jan. 3, the first business day of 2022, and will be subject to monthly limits that are significantly higher than the previous ones. They will be able to convert LL100 million into dollars per month at Sayrafa rate, the equivalent of $2,631.6 as of Wednesday, whereas they could previously only take out $400 per month at that institution.
According to information provided by several other banking sources, a majority of banks are expected to implement terms similar to those of BLOM Bank, with limits for individuals ranging between $2,500 to $4,000 per month, and with much higher, or even nonexistent, limits for corporations.
It was not clear, however, whether other banks had begun serving corporations as early as yesterday or would begin doing so today, while fuel import and distribution industry actors assured that this is not the case.
Mixed decline in the rate
What is certain, however, is that BDL has left banks free to decide how to implement its decision and it has not issued a circular specifically dictating the conditions they must follow.
On Tuesday, BDL curbed a new phase of exchange rate inflation in the market by announcing two exceptional measures regarding transactions related to Circular No. 161. For more than a year, the circular has allowed holders of accounts in lira, whose value has collapsed in the market, to convert and then withdraw small amounts of “fresh dollars” (the dollars not subject to banking restrictions) each month at the Sayrafa rate.
BDL first increased the Sayrafa rate by LL6,800 to LL38,000. It also lifted all buying and selling limits for “individuals and companies” at banks. Finally, it indicated on the same day that the transactions concerned can be made in the banking institutions until 5:00 p.m. each business day until Jan. 31.
It is BDL that provides the dollars converted by the banks, drawing them from its reserves, which have been dwindling since the beginning of the crisis ($10.22 billion as of Dec. 15, down by nearly 70 percent in three years according to L’Orient-Le Jour’s calculations, for the portion that does not include Eurobonds or gold).
The announcements, which echo previous similar interventions by BDL in January, May and October of last year, had a more limited effect on the market exchange rate, where both legal and illegal brokers trade. At more than LL47,000 at the time of the announcements, the rate fell by only LL4,000 at most, before hovering around LL44,000 until last night.
This article was originally published in French in L'Orient-Le Jour. Translation by Joelle El Khoury.
