It now takes more than 6,000 Lebanese pounds to buy one US dollar

Lebanese currency hits new low as a severe dollar shortage fuels inflation.

    The pound has lost about 75 percent of its value since October, when Lebanon was plunged into a crisis [File: Mohamed Azakir/Reuters]
    The pound has lost about 75 percent of its value since October, when Lebanon was plunged into a crisis [File: Mohamed Azakir/Reuters]

    The Lebanese pound fell to new lows on Tuesday, trading above 6,000 to the dollar on a parallel market - in violation of new rules - according to market participants.

    An extreme dollar crunch has severely eroded the value of the Lebanese currency. 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 percent of its value since October, when Lebanon was plunged into a crisis that has led to widespread job losses, price hikes and informal capital controls that have severed Lebanese people from their hard foreign 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 Lebanese pounds to $1 on Tuesday as part of the scheme.

    However, exchange houses said on Monday that 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 price for purchasing dollars was about 5,000 Lebanese pounds 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.

    Lebanon's official exchange rate still pegs to the dollar at 1,507.5 pounds, but that rate remains available only for imports of wheat, medicine and fuel.

    SOURCE: Reuters news agency