| 16 April 2024, Tuesday |

Did the drop in dollar topple the proposal to raise the exchange rate of bank withdrawals?

Whoever was saving his dollars that are trapped in banks and delaying withdrawals at the exchange rate of 3,900 LBP during the past two months, in the hope of amending circular 151 late this month and raising the dollar exchange rate in banks to 6,000 or 8,000 LBP, has wasted his time and missed the opportunity to withdraw his monthly ceilings.

It is likely that circular 151 will be extended without any modification, after the formation of the government led to a drop in the exchange rate of the dollar from 20,000 LBP to about 14,000 LBP. The parliamentary voices demanding an amendment to the exchange rate of bank withdrawals to protect depositors’ savings has dwindled.

The Central Bank of Lebanon, which showed some kind of positivity and willingness before forming the government, to discuss the possibility of amending the banks’ dollars, its sources made it clear to Sawt Beirut International (SBI) that there has been no decision to date to amend the circular.

A study prepared by the Central Bank on the implications of raising the exchange rate of bank withdrawals, on the size of the money supply in pounds, found that this step will raise the inflation rate and increase the demand for the dollar in the market, which will lead to a rise again, and thus a decrease in the purchasing power of the citizen.

Central Bank sources explained that the proposal to amend the exchange rate of bank withdrawals to 6,000 pounds when its rate on the black market amounted to 20,000 LBP would have reduced the percentage of damages for depositors from about 85 to 65 percent, but with a decline of the dollar exchange rate on the black market to 14,000 LBP there is no need to adjust the withdrawal price, because the percentage of the targeted haircut by raising the price to 6,000 LBP has been achieved automatically.

However, banking sources confirmed to SBI that adjusting the exchange rate of bank withdrawals is a political decision rather than a banking decision.

  • Sawt Beirut International