The success of stopping the collapse of the Lebanese pound … and the “achievement” depends on political support

The success of stopping the collapse of the Lebanese pound … and the “achievement” depends on political support

The Central Bank committed to pumping the dollar, and the banks implemented mediation

Tuesday – 1 Dhu al-Qi’dah 1443 AH – 31 May 2022 AD Issue no. [

It is likely that there will be a decrease in the volume demand for the green currency (EPA).

Beirut: Ali Zeineddine

The first day of the implementation of the Central Bank of Lebanon’s initiative to intervene intensively in the foreign exchange market ended with the achievement of a high but incomplete mark of success, as banks responded to many of the barter transactions from their centers and branches of individuals and companies from the lira to the dollar, and at the rate approved by the “exchange” platform. »The amount of 24.6 thousand pounds per dollar, while part of the cash dollar deliveries have been suspended until today (Tuesday) due to the large demand for the available quantities.
Bank sources accompanying Asharq Al-Awsat confirm that the transformation of the achieved success into a long-term or sustainable performance will remain in the circle of “uncertainty” due to significant obstacles associated with the shrinking volume of hard currency reserves with the Central Bank to less than $ 10 billion. However, this doubt can later be dispelled in the case of a parallel improvement in the internal political climate by speeding up the process of forming a new government and – or establishing internal understanding that consolidates internal stability at the gates of a promising summer tourism season that could reach an abundance of additional liquidity of up to $ 3 billion.
While noting that the large amount of money in pounds available in the market, which exceeds 41 trillion pounds, the sources indicate the possibility of pumping about one billion dollars to absorb most of it (about 25 trillion pounds) and to prevent later recovery the fierce speculation about the exchange rate of the national currency. However, such a decisive intervention by the monetary authority, according to the current pattern of the initiative, will inevitably have a lack of additional impetus from all political parties, starting with the “safe” exit to a new Speaker of the House of Representatives, his deputy and the bureau today, especially in light of the pressure generated by the succession of constitutional elections.They reached the end of the term of the President of the Republic at the end of next October.
With the continuation of the first phase of intensive intervention operations for three consecutive days and intensified by the extension of working hours in banks to six o’clock in the evening, it is likely that there will be a gradual decrease in the level of congestion through bank outlets, and in connection therewith, a similar decrease in the magnitude of the movement of demand for green currency; This will enable the monetary authority to reprogram the course of day-to-day operations at a later date, thus getting closer to reaching the limits of the regularity it seeks.
In contrast to the daily disclosure that the Central Bank circulates about the total daily volume of operations via the platform and the price approved on the next day, this is expected, given the intensity of operations and its extension for four additional work hours, that announcement will be made late at night or the next day, on the outcome of the volume of operations implemented and under implementation for the first day, with an estimate that it is approximately two or three times the usual average of approximately $ 60 million per day on the “exchange” platform.
The regulatory measures implemented by the banks have contributed to the smooth flow of operations without significant problems, especially as they have adopted unified standards in the implementation of operations to the benefit of individuals and institutions. Ceilings have been set for transfer requests ranging from two thousand to three thousand dollars for each individual and about 10 thousand dollars per company. This led to the distribution of instant liquidity to the largest possible number of customers, while others received notifications that they had obtained the monetary cash within the payments allocated for the second day.
Most of the banks, especially the large ones, supported these measures, with an emergency measure that determined the payment of the monthly salaries due to significant categories of the public sector in dollars by automated counting machines outside bank branches and without the usual exclusive exchange required. in the one hundred dollar category, especially for the benefit of members of the military and security services who came in thousands To collect their allocations, they did not need to enter the branches to inject additional amounts of the lira to to obtain the hundred. dollars, after the banks pumped up the smaller denominations of the green currency.
Under the guise of the obvious technical delay in the execution of operations in the morning, the influential people in the irregular foreign exchange markets showed an express stubbornness to identify with the qualitative monetary transformation achieved by the initiative through the scale of the operations of the “expanding scholarship”. This is expected, and therefore they have adopted early price levels that exceed the exchange rate covered by the Banque du Liban by about 2,500 pounds, or by more than 10 per cent.
While active sources in the currency markets indicated that many floating money changers and traders suffered huge losses due to their possession of the dollar at the record price late last week, and at the highest level, communication was around £ 38,000 in anticipation of lucrative profits in the following week, it was actually noted that even hours after noon, data for the rise in the price of the dollar was circulated by telephone applications and special groups for social communication, before it gradually deteriorated after the reluctance of money changers verified to exchange the dollar for the pound according to the prices displayed on the screens.
On the other hand, banking sources and the like from the money exchange circles in the “Middle East” doubt the possibility of a role for the Banque du Liban and some banks in maintaining the price differences between the “exchange” platform and the references of the irregular markets, where signals and information about the entry of the two parties are traded directly to the proceeds. every thousand dollars.
It was noted, as a inference from these data, that the exchange rates approved by money transfer companies and cooperating with the exchange rate departments of the Central Bank remained at the level of 27 thousand pounds per dollar and without any adjustments during working hours. This automatically means that dollar transfers received from abroad for the benefit of families at home have maintained the immediate exchange rate margin, with a profit that is close to the exchange rate for the benefit of those who want to convert to the lira. Note that the same companies receive additional bonuses to attract as many dollar amounts as possible to the benefit of the Central Bank and some banks that sometimes require liquidity.
In a context related to liquidity management and to enable clients to reuse tools that had experienced major difficulties in the previous period, and according to the decision of the Board of Directors, the Association of Banks has a recommendation to banks circulated to re-accept all checks whose value is. not exceeding USD 15, deposited with them by the beneficiaries in their accounts, provided that the client is obliged in return not to ask for cash to be collected or to transfer it after collection outside Lebanon, as well as the condition of the previous identification with the nature of the account’s ordinary activity and movement, and in particular, checks drawn in the order of any current or retired self-employed person from his union’s mutual fund. The Secretary-General of the Association has been instructed to deal with exceptional cases relating to certain special accounts in co-operation with the bank concerned and the delegate of the liberal professional unions authorized for this purpose.


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