BEIRUT — The Lebanese lira on Thursday hit an all-time low, trading at above LL62,000 against the US dollar on the parallel market, after it hit the 60,000 threshold for the first time earlier in the day, according to the online platform Lirarate.
Some experts say it is possible the dollar will double in value against the lira by the end of the year if the status quo continues.
BDL's Sayrafa rate, in which it provides dollars to depositors in an attempt to limit depreciation of the lira, is at LL38,000 against the dollar, as of Tuesday. The gap between that rate and the market one now amounts to around LL24,000.
BDL has on repeated occasions over the past three years succeeded in lowering or slowing the pace of lira’s depreciation, but this time it appears the central bank’s maneuvers have lost their impact. This indicates that the actors of the Lebanese economy seem to have lost all confidence in the ability of the ruling class to tackle the country’s problems, according to Marwan Barakat, head of research at Bank Audi.
“The recent depreciation of the lira is linked to the lack of confidence amid a presidential vacuum and in the absence of a fully-fledged cabinet, while reforms are at a standstill, which jeopardizes a potential final agreement with the International Monetary Fund,” Barakat told L’Orient-Le Jour.
The drop comes days before the bank dollar ("lollar") withdrawal rates are set to increase from LL8,000 to LL15,000 starting next month, as new measures by the central bank come into force. The move is expected to further depreciate the value of the lira against the dollar.
In response to the lira's continued fall, demonstrators on Thursday cut off part of Beirut's Bechara al-Khoury Avenue as well as a road in the Qasqas neighborhood, according to the state-run National News Agency.
In the South, protesters reportedly burned tires to block the main entrance to the city of Sour, near the local headquarters of Électricité du Liban.
The freefall of the lira spiked protests across Lebanon this week as angry demonstrators took to the streets, and blocked roads in several areas in Lebanon.
The lira's fall has also seen rising prices of medicines and food.
BDL announced the passage of new circulars on Friday afternoon. Their measures will take effect beginning Feb. 1 and concern transactions authorized by Master Circular No. 151 (dated April 21, 2020) and No. 158 (dated June 8, 2021).
Circular No. 151 allows depositors suffering from restricted access to their foreign currency accounts to withdraw small sums — determined by the banks — in Lebanese lira each month at a rate BDL previously set at LL8,000.
Circular No. 158 allows monthly withdrawals of $400 in cash from the same restricted accounts. It also allows for withdrawals of the equivalent sum in lira, converted at a rate of LL12,000 to the dollar.
Annual withdrawals are limited to $4,800 in bank dollars that can be withdrawn in fresh dollars. Another $4,800 bank dollars can annually be withdrawn in lira but only half of this can be withdrawn in cash while the other half can only be used to make card payments.
With Friday's two amendments, the conversion rate of both circulars will be shifted to LL15,000 to the dollar.
BDL also published a third decision with equally heavy consequences.
Beginning Feb. 1, clients of Lebanese banks residing abroad will be forced to repay all foreign currency loans — including personal and housing loans — in fresh dollars.
In more than three years of economic crisis in Lebanon, the national currency has lost more than 97 percent of its value. Meanwhile, without a president or fully empowered cabinet, the Lebanese authorities continue to stall in adopting the reforms needed to halt the country's economic and financial collapse.