Politically motivated currency rumors blamed for Lebanon unrest

Politically motivated currency rumors blamed for Lebanon unrest
A man sweeps glass off the ground outside a bank in Lebanon’s northern port city of Tripoli after it was vandalized by protesters. (AFP)
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Updated 13 June 2020

Politically motivated currency rumors blamed for Lebanon unrest

Politically motivated currency rumors blamed for Lebanon unrest
  • Parliament Speaker Nabih Berri refuses to dismiss the governor of the Banque du Liban: ‘We need everyone’

BEIRUT: Lebanon’s leaders on Friday focused on curbing the sudden rise in the dollar exchange rate following a stormy night of protest into the early hours of Friday morning around the country.
The Cabinet meeting chaired by President Michel Aoun agreed to an interim adjustment to address the crisis.
From Monday, the Banque du Liban will pump $5-9 million per day to category-A money-changers so that they can gradually reduce the dollar exchange rate from 3,850 to 3,200 Lebanese pounds, provided a security crackdown on black-market money-changers is implemented in parallel.
Before the session Prime Minister Hassan Diab met the money-changing syndicate, a delegation from the Association of Banks and the head of the security services.
Sources close to the parties at the meeting said that “news about the dollar exchange rate reaching 7,000 Lebanese pounds on Thursday night was just a rumor,” stressing that “the dollar exchange rate did not exceed 5,300 Lebanese pounds, and that the purpose of this rumor was political.”
“This became clear when the protesters demanded one thing only in front of the media, which was the dismissal of the central bank’s governor, Riad Salameh, and they attacked the bank’s branches,” the sources added.
“The agreed mechanism will allow category-A money-changers to get dollars from the central bank. The number of these money-changers does not exceed 50, and the 250 category-B money-changers will not be able to purchase these dollars from the central bank.”
The Banque du Liban defines the function of category-B money-changers as “buying and selling foreign currencies against any other foreign currency or against the Lebanese currency, buying and selling metal coins and gold bars below 1,000 grams, and selling traveler’s checks, provided the value of the checks still to be collected does not exceed $10,000 or its equivalent in other currencies at any time.”
The sources told Arab News: “There are ministers who objected to the proposal that requires businessmen to deal with category-A money-changers and present invoices from these money-changers to the banks they deal with in order to make transfers in dollars so as to prevent businessmen from dealing with the black market.”
Some ministers considered this proposal impractical because there are businessmen who keep their money in their homes and use it in their transfers, so they cannot provide invoices to prove the money’s source.
Discussions during the Cabinet meeting focused on tackling the financial chaos by implementing strict security measures and reducing the media that accompanied the protests.
After his meeting with President Aoun and Prime Minister Diab at  Baabda Palace, Parliament Speaker Nabih Berri was keen to declare that “it was agreed to reduce the value of the dollar against the Lebanese currency, starting today, to less than 4,000 Lebanese pounds until it reaches 3,200 Lebanese pounds. It was also agreed to communicate with the International Monetary Fund using one language under the auspices of the parliament.”
When asked whether the dismissal of the central bank’s governor, Riad Salameh, was discussed during the meeting, Berri replied: “We need everyone aboard today, we do not need to dispense with them.”
On Friday, money-changers refrained from making dollar purchases or sales, pending the outcome of the meetings.
Aoun wondered during Cabinet’s session if the aim of the rise in the dollar exchange rate on Thursday was to bring people to the streets and cause the disturbances.
He also wondered if this was a political or a banking game or something else.
He said that three parties were accountable for the financial chaos: The government, the Banque du Liban, and the banks, highlighting that “the losses should be borne by these parties, not the depositors.”
Prime Minister Diab said: “The country cannot stand further turbulence, and strict measures are required to stop any person or entity that resorts to this method.”
The security services announced the arrest of five money-changers in Beirut, Chtaura, and Tripoli as well as an Ethiopian in the locality of Dora who were involved in illegal money-changing.
Former Prime Minister Saad Hariri described intimidation calling for the dismissal of Riad Salameh as “an economic, political and constitutional madness that will slaughter the Lebanese economy.”
He wrote: “They are searching for a way out to save themselves from the evil of their own decisions and actions, not for a solution to save the economy.”
“This is a malicious and vengeful mentality that is looking for a scapegoat to absorb the people’s righteous anger and cries of hunger from all regions,” he said.
Samir Geagea, head of the Lebanese Forces Party, said on Twitter: “As long as Hezbollah, the head of the Free Patriotic Movement, Gibran Bassil, and their supporters are in power, prepare for further deterioration every day.”
Former Minister Mohamed Choucair said: “The rod, threats, and the imprisonment of money-changers cannot reduce the dollar exchange rate. Even the decision to pump dollars into the market will not produce anything and will only drain the foreign exchange reserves. Achieving this requires two main factors: the citizens’ confidence in the government and its performance  and securing liquidity in dollars from abroad. Everything else is useless.”
Activists in the civil movement are preparing for a huge demonstration on Saturday. It will start outside the Ministry of Finance in Beirut and go to Riad Al-Solh Square.
It is not known whether supporters of the parties in power will join the protesters opposing the government at the weekend.
Amal and Hezbollah supporters joined the protests on Thursday night, and demonstrations were seen in the southern suburbs of Beirut for the first time since the uprising started in October.
However, their only demand was to hold the governor of the Banque du Liban accountable.
This demand was raised in the Cabinet weeks ago by the Free Patriotic Movement and was later passed over in order to prevent any financial tensions.