By Mahmoud Hemdan — forbes –– Lebanon’s central bank will start Thursday selling the US dollar at 70,000 Lebanese pounds through its banking platform Sayrafa to meet the demand from companies and individuals, Banque du Liban Governor Riad Salameh said. Applications are to be submitted through banks and registered through Sayrafa, and paid within three working days, according to the central bank, which pointed to a ceiling for individuals of one billion Lebanese pounds per month for each account in each bank. Corporate ceilings are set at 10 billion Lebanese pounds in each bank, while this measure won’t apply to fuel importers. According to the circular, banks will stop buying dollars for their customers at a ceiling of $300 per month. The Lebanese pound has deteriorated to a new record level against the US dollar in the black market to reach 92,000 Lebanese pounds, from 89,000 pounds Tuesday, compared to 42,000 pounds at the beginning of 2023.

Food pricing

The new deterioration in the exchange rate of the Lebanese pound coincides with shops and supermarkets starting to price food and products in US dollars, which can be paid in Lebanese pounds according to the daily exchange rate. The Council of Ministers took this decision to reduce market manipulation and different pricing of goods against the dollar. Minister of Economy and Trade in the caretaker gove

rnment, Amin Salam, said, “The Lebanese currency was consumed and exploited by the dollar, due to the old fiscal policies.” The import rate from abroad is about 90%, making all transactions in US dollars.

Retail stores placed prices in US dollars instead of Lebanese pound and put signs above the cashiers showing the dollar exchange rate for those wishing to pay in local currency. The average inflation hit 218% in Lebanon on an annual basis in the first half of 2022, while food price inflation exceeded 390%, after reaching its highest level at 483% in January 2022, according to World Bank data.

Money supply

According to central bank data, the money supply in Lebanon, including currencies in circulation and deposits in Lebanese pounds, jumped 134% by February 16 on an annual basis to 111.33 trillion pounds, compared to 74.43 trillion pounds in the corresponding period last year. Supply increased by 341 billion pounds during the week to February 16, while saving deposits in pounds fell by 82 billion pounds, indicating its continued withdrawal. Foreign currency deposits rose by $401 million compared to the previous week. On February 1, the official exchange rate for the dollar was set at 15,000 pounds to the dollar.

Foreign reserves

Lebanon’s foreign reserves amount to $15 billion, of which $10 billion can be used abroad. Gold reserves are estimated at about $17 billion, according to Salameh last month.

‎Customs dollar

From Wednesday, Lebanon started applying a new exchange rate to calculate customs duties and taxes on imported goods and commodities, which is 45,000 pounds. The government had already raised the customs dollar on imported goods by about tenfold to 15,000 at the end of 2022 from the previous 1,507.5. Last Wednesday, the central bank extended the period allowing commercial banks to buy unlimited amounts of dollars until the end of next month on Sayrafa. Lebanon is in the midst of political and economic crises. The term of President Michel Aoun ended in late October, and another president is yet to be elected. It is expected that the vacancy contagion will move to the central bank governor’s seat in July after Salameh said he will not hold the post for a sixth period.

Translated by Mary Khoury