The Lebanese Central Bank begins working on a new mechanism to liberate the pound from the grip of the black market traders |

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Beirut – The Central Bank of Lebanon has officially started work on a “exchange” platform for the exchange of currencies, which experts believe aims to free the lira under the control of the black market, at a time when the country is suffering an escalating financial and economic crisis, caused by the drop in the value of the national currency near its lowest levels against the dollar.

Last week, the Governor of the Banque du Liban, Riad Salameh, announced that “participants wishing to register all requests for foreign exchange on the platform must fill in their data from May 21 to May 25, and pay the required amount immediately in local currency.”

On Thursday, the registered transactions were settled and the equivalent in US dollars was obtained, according to the supply and demand for foreign exchange within a specific account mechanism.

The exchange rate of the dollar on the first days of settlement in the parallel market reached 13 thousand pounds per dollar, compared with 12.9 thousand on Wednesday, while the exchange rate on the new platform reached 12 thousand, and is stable according to the central bank rate at 1510.

Through the new management of exchange rates and circulation, the Lebanese hope to restore the movement of the dollar to official channels and gradually undermine the parallel market.

Economist Jassim Ajaga says that the new mechanism for exchange rates, which was circulated by the Banque du Liban, “aims primarily to withdraw the pound from the grip of the gangs that control it in the black market.”

The economist explained that “on the black market the exchange rate of the lira is free and on this platform the exchange rate will remain free as well, but the difference between them is that there is monitoring of operations and knowing the direction of the dollar, whether it is for speculation, smuggling or trade.”

He said, “With the monitoring process imposed by the Banque du Liban, the speculative element has disappeared, and there will be no sharp fluctuations in the exchange rate of the dollar against the lira.”

But the platform will not prevent the rise of the dollar in the parallel market, especially since its rise is linked to a structural price related to the lack of abundance of the dollar in the local markets, and it is much less than the market need, according to the economist.

As for controlling fluctuations in the dollar’s ​​exchange rate, he said, “This mechanism will only be able to control the dollar at low prices through negotiations with the International Monetary Fund, and the introduction of dollars into the local economy.”

If this mechanism were to topple the black market, Ajaqa pointed out that “the price on the platform is free, but transparent and subject to control .. In practice, this mechanism will weaken the black market, and only violators, money launderers and smugglers will remain on it.”

“The platform’s success depends on the work of the security services, the Ministry of Economy, the Ministry of Finance and Customs, to prevent smuggling and combat the black market. These steps are essential steps for its success.”

The Lebanese pound recorded its lowest historical price, at a value of 15,000 against the dollar, earlier this year.

These moves come after the Central Bank announced earlier this month a conditional mechanism for disbursing the money of depositors, whose accounts have been frozen since 2019.

At the time, the bank stated that it was in talks with local banks to set up a system that would enable depositors to disburse $25,000 of their money in installments.

He explained that “these amounts will be paid in installments over a period of time to be determined by the Banque du Liban soon. It is expected that the payment will start from June 30, 2021, provided that legal coverage is obtained.”

In the past, Lebanese banks were among the most profitable in the world and used to transfer money from the Lebanese diaspora to the state coffers in exchange for high interest rates. However, with the intensification of the economic collapse in Lebanon and the depletion of dollar transfers from abroad, liquidity began to run out in the financial system.

With the onset of the financial crisis in late 2019, Lebanese banks froze customers’ access to their deposits and prevented them from transferring funds abroad, in an attempt to manage liquidity with scarce foreign exchange in particular.

Economist Patrick Mardini stressed that “the goal of the platform is to regulate the supply and demand for the dollar to limit it to one place on the platform, so any individual who wants to buy the dollar is done through this platform and any individual who wants to sell the dollar is also done through it.”

Mardini pointed out that “the platform is not to reduce the exchange rate of the dollar, although upon its launch an optimistic atmosphere was broadcast, saying that it would give the real value of the pound and the dollar .. Simply the goal of the platform is to return the exchange to the official market.”

On Tuesday, Standard & Poor’s Global Credit Ratings Agency confirmed that Lebanese banks may face difficulty maintaining their operations as deposits continue to be withdrawn, foreign correspondent banks cut off relations, and the country’s economic crisis continues.

In April 2020, Lebanon proposed a restructuring plan, but it was not implemented due to political differences, leaving markets in uncertainty about the potential cost of the country’s financial crisis.





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