Lebanon’s Berri urges government to halt dramatic collapse of currency

Lebanon’s Berri urges government to halt dramatic collapse of currency
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Updated 24 April 2020

Lebanon’s Berri urges government to halt dramatic collapse of currency

Lebanon’s Berri urges government to halt dramatic collapse of currency
  • Lebanese lira collapsed from 3,200 to 3,800 against the dollar on Thursday
  • A panic withdrawal followed, with residents violating the coronavirus lockdown rules

BEIRUT: The political conflict between Lebanon’s speaker of parliament Nabih Berri, the government and circulars issued by the Central Bank regarding dollar transfer services has led to a new wave of chaos in the local financial market.

As the Central Bank issued a circular ordering all money transfer services to process dollar transfers in the Lebanese pound, the local currency hit a record low. On Thursday noon, the Lebanese lira significantly collapsed from 3,200 to 3,800 against the dollar.

The head of exchange houses in Lebanon, Mahmoud Mrad, told Arab News: “What happened is incomprehensible. People rushed to money transfer services to receive their money in dollars, just hours before the circular of the Central Bank enters into force, ordering money transfer services to issue cash in the local currency at a market rate and not the official rate.”

He added: “At the same time, people also rushed to exchange houses to buy dollars, amid fears of a price increase as the political scene seems very unstable in the country and since people have lost confidence in the financial situation.”

The demand for dollars on Thursday was “unprecedented,” according to Mrad.

He said: “I personally sold $200,000 to normal people and not to dealers. I cannot explain the situation. It smells fishy and it seems like there is an attempt to confuse the situation.” 

Mrad added: “Unlicensed money changers have highly contributed to the current situation by selling dollars at high prices after the closing of approved money changers’ houses, without being punished by the state. They are arrested only to be set free later, without even confiscating their money. I personally told this to the interior minister.”

On Thursday, people formed long queues outside money transfer businesses.

The gatherings violated the lockdown decision, which banned gatherings to prevent the spread of coronavirus.   

Lawmaker Faisal Karami said the surprising increase in the dollar price reminded him of what happened to his late uncle, former Prime Minister Omar Karami, in 1992 to bring him down.

Prime Minister Hassan Diab called on “eliminating all red lines protecting Central Bank Governor Riad Salameh and corruption.”

He also warned that “the dollar game is the beginning of a social and maybe even a security disaster.”

Meanwhile, Berri criticized the performance of the government: “The government must use its legal powers to stop the dramatic fall of the lira before it is too late.”

Berri stressed that the government cannot remain “an observer to the financial chaos, claiming to be very concerned about the people.”

Berri has criticized the government for referring draft laws to parliamentary sessions without passing them by parliamentary committees. The secretariat said: “The government must learn to send draft laws to the parliament before insulting it.”

A parliamentary session was suspended because of a lack of quorum, before the parliament could treat the draft law aiming to allocate 1,200 billion liras to support agriculture and industry, import raw material and provide soft loans to small and medium-sized enterprises.

Meetings between Salameh, President Michel Aoun and then Diab did not produce any immediate solutions to the crisis.

Diab is expected to announce what he described as “restrictive positions over the dollar crisis” after Friday’s ministerial session.

He complained about “a lack of coordination between the government and the governor of the Central Bank.”