Depositors' losses accumulate as BDL fails to adjust exchange rate

News Bulletin Reports
2023-03-16 | 09:43
High views
Share
LBCI
Share
LBCI
Whatsapp
facebook
Twitter
Messenger
telegram
telegram
print
Depositors' losses accumulate as BDL fails to adjust exchange rate
Whatsapp
facebook
Twitter
Messenger
telegram
telegram
print
2min
Depositors' losses accumulate as BDL fails to adjust exchange rate

In November of last year, the Governor of Banque du Liban (BDL) announced that the exchange rate would be set at LBP 15,000 per US dollar, effective from February. At that time, Lebanese withdrew their frozen dollars from the bank at a rate of LBP 8,000 per dollar, while the black market rate was LBP 40,000 per dollar, resulting in a loss of 80% on withdrawals, or a "haircut."

At the beginning of February, when withdrawals started at the new rate of LBP 15,000, the black market rate had risen to LBP 50,000 per dollar, reducing the haircut from 80% to 70%.

As the exchange rate climbed above LBP 100,000, haircuts exceeded 85%. Meanwhile, everything became more expensive, with the customs dollar reaching LBP 45,000 and the exchange rate at banks reaching LBP 80,000.

Currently, there is no indication that the exchange rate will be adjusted to a higher level anytime soon due to the country's tense political climate and legal developments.

According to banking sources, the first condition for such a move is that the withdrawal limit in Lebanese pounds remains low to avoid increasing the cash supply in the market, which has already increased significantly after public sector salary hikes.

The second condition is the exchange rate increase on dollar loans, as banks cannot receive loan payments at a rate and pay depositors at a higher rate. 

Some sources suggested that the best solution is not to raise the withdrawal rate beyond LBP 15,000 but to try to reduce the black market rate, driven mainly by political pressures, by starting reforms and regulating state expenditures.

What is happening now is causing losses to the economy, the country, and the depositors, which is not a sustainable solution.
 

Breaking Headlines

Lebanon News

News Bulletin Reports

Lebanon

Lebanese

Depositors

Depositor

BDL

Central Bank

Exchange Rate

Dollar

LBP

LBCI Next
Forensic report on BDL submitted by A&M to Finance Minister sheds light on Forry controversy, suggests criminal implications
Download now the LBCI mobile app
To see the latest news, the latest daily programs in Lebanon and the world
Google Play
App Store
We use
cookies
We use cookies to make
your experience on this
website better.
Accept
Learn More