Behind recent 'yo-yo' of Lebanese lira interest rates: A short-sighted monetary policy

While attention was focused on Syria and the upcoming Lebanese presidential deadline, banking and financial circles, along with some depositors, witnessed significant turbulence in the Lebanese lira deposit interest rate market in recent weeks. After a surge in December, peaking at 45 percent, these rates have recently been corrected. Several banking sources confirmed to L'Orient-Le Jour that a number of banks of all sizes have stopped offering such attractive interest rates to depositors, due to a relative improvement in available market liquidity. The central bank's (BDL) latest bi-monthly report shows a significant increase in the money supply in circulation, approximately 17 percent over the last two weeks of December, to around L.L. 65,500 billion (about $732 million at the current exchange rate).Indeed, the sudden surge in interest...