Lebanon’s central bank secures dollars to cover some imports

BEIRUT (AP) — Lebanon’s central bank issued guarantees yesterday to secure United States (US) dollars for local banks at the fixed official rate that would cover imports of fuel, wheat and medicine, a move aimed at easing the demand for dollars amid a worsening economic crisis.

Many Lebanese have been rushing to exchange shops in recent days to convert their local currency into dollars, a rush compounded by worries that Lebanon’s dollar-reliant currency is losing value for the first time in more than two decades.

Hundreds of Lebanese civil society activists and others protested last Sunday over the economic crisis, blaming their leaders for decades of mismanagement and corruption that led to the crisis.

The central bank said the imports of gasoline, wheat and medicine it would secure hard currency for are “only for local consumption.” The move will cover only imports into Lebanon amid reports that gasoline and wheat are being smuggled to neighbouring war-torn Syria, which is under US and European sanctions.

“The crisis will be contained for now,” tweeted professor of economics at the American University of Beirut Jad Chaaban predicting that pressure on the exchange rate will substantially ease, even in the black market.

Last week, USD1 could be purchased for LBP1,650 at exchange shops, after the currency had been stable at 1,500 to the dollar since 1997. Although the official price is still pegged at 1,500 pounds to the dollar, people find it difficult to get hard currency at this rate from local banks.