June 23, 2020 / 12:22 PM / 17 days ago

Lebanese pound slides to new lows, passing 6,000 to the dollar

BEIRUT, June 22 (Reuters) - Lebanon’s pound currency fell to new lows on Tuesday, trading above 6,000 to the dollar on a parallel market, according to market participants, as a severe dollar crunch further eroded its value.

President Michel Aoun said earlier this month that the central bank would begin using limited dollar reserves to support the pound after a sharp fall sparked fresh public protests.

The pound has lost about 75% of its value since October, when Lebanon was plunged into a crisis that has led to job losses, price hikes and capital controls that have severed Lebanese from their hard currency savings.

With few sources of fresh dollar inflows, the central bank has looked to stabilise the dollar rate at exchange houses by setting a unified rate with them each day, with legal penalties for dealers that operate above it. The rate was set at 3,850/3,900 on Tuesday as part of the scheme.

However, exchange houses said on Monday the reduced rate would be available only to customers with specific documented needs such as paying dollar-denominated loans, plane tickets, overseas school fees and salaries for foreign workers.

Two dealers said on Tuesday they were buying dollars for 6,000 pounds. One of them said he was selling dollars for 6,200 while the second said he was not selling. The rate compares to a dollar buying price of about 5,000 a week ago.

Hani Bohsali, president of the Syndicate of Importers of Foodstuffs, Consumer Products and Drinks, said dollars at any price were “almost impossible to secure” and a system to allocate dollars for food importers was barely functioning.

Bohsali said he was also quoted a rate of 6,000/6,200 pounds for buying and selling on Tuesday.

The pound remains pegged to the dollar at 1,507.5, but that rate remains available only for imports of wheat, medicine and fuel.

Reporting by Tom Perry, Eric Knecht, Laila Bassam and Ellen Francis Editing by Gareth Jones

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