Lebanese pound-dollar exchanges, interbank rates up after Hariri crisis:  Central Bank chief

 20 Nov 2017 - 14:23

Lebanese pound-dollar exchanges, interbank rates up after Hariri crisis: Central Bank chief


BEIRUT: Currency conversions from Lebanese pounds into dollars have increased since the prime minister’s shock resignation, Lebanon’s central bank chief said, but at levels “naturally” expected in such conditions.

In an interview with the Saudi-owned pan-Arab newspaper al-Hayat, Central Bank Governor Riad Salameh sought to ease fears the political crisis was becoming an economic one.

Salameh also played down a rise in interbank lending rates in Lebanese pounds to 100 percent, saying that had only “encompassed small amounts”.

The central bank has not intervened to inject pound liquidity, he said, adding that the $43 billion of foreign currency reserves held by the central bank have been “enough to prevent panic in the markets”.

Prime Minister Saad al-Hariri’s resignation more than two weeks ago from Saudi Arabia thrust Lebanon to the forefront of a regional struggle for influence between Saudi Arabia and Iran, and raised concerns for an economy that relies heavily on remittances from Lebanese working in Gulf Arab countries.

Hariri has said he will return to Beirut by Wednesday for Independence Day celebrations.

“The political crisis affected traders psychologically, but countries announcing their support for Lebanon’s stability and national unity, and Hariri announcing he will return to Lebanon, helped quieten the markets,” Salameh told al-Hayat.

Salameh denied reports that people were being prevented from withdrawing their Lebanese pound deposits as a result of the crisis.

Many Lebanese have deposits which can only be cashed in on the account’s maturity - for example after one or three months.

Banks have told Reuters that whereas before they might have at their own discretion allowed early withdrawal on some small amounts, since the crisis they are now enforcing the maturity dates.

Salameh said banks had asked people wishing to withdraw deposits to “wait until the date of maturity”. He said this was normal banking procedure.

Salameh denied what al-Hayat described as “talk of banks preventing depositors from converting their lira funds into dollars”.

He also said Lebanon’s central and commercial banks were prepared to deal with any sanctions or measures which the U.S.  Treasury might take.