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BEIRUT (Reuters) – Lebanon’s central bank said on Thursday it would sell U.S. dollars to commercial banks at the rate listed on its foreign exchange platform, but analysts said more hard currency would do little to stabilize the already battered Lebanese pound.
Lebanon’s economy has been in free fall since 2019, when a mountain of debt and political crisis pushed the country into its deepest crisis since the 1975-90 civil war.
The Lebanese pound, which traded freely at 1,500 against the dollar before the crisis, collapsed to about 25,000 on the unofficial market. And on the central bank’s foreign exchange platform, known as banking, the exchange rate on Thursday was 22,300.
Mike Azar, a financial advisor in Beirut, said the central bank’s latest step was “to stabilize the lira but an insolvent bank that is bleeding foreign currency … cannot stabilize the currency through market intervention. It has no credibility.”
With Lebanon in crisis, depositors – many of whom have dollar accounts – were deprived of their savings and were only allowed to withdraw them in Lebanese pounds at a rate well below the unofficial exchange rate on the street.
Last week, the central bank said that depositors who withdraw from their dollar accounts will receive Lebanese pounds at the rate of 8000 pounds to the dollar, which is an improvement from the previous rate of 3,900 dollars, but it is still much lower than the normal rate or the exchange rate.
In a statement on Thursday, the central bank said that depositors can use the Lebanese pounds they withdrew to repurchase dollars but at the exchange rate, which effectively means that they receive approximately 70% of the value of their deposit in original dollars.
(Reporting by Lilian Wagdy and Maha El Dahan; Editing by Andrew Heavens and Edmund Blair)