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Lebanon to devalue currency by 90 pct: central bank

Lebanon’s central bank says the country will adopt a new official exchange rate that marks a 90 per cent devaluation of its currency.

February 1, 2023
1 February 2023

Lebanon will adopt a new official exchange rate of 15,000 pounds per US dollar on February 1, central bank governor Riad Salameh says, marking a 90 per cent devaluation from its current official rate that has remained unchanged for 25 years.

The shift from the old rate of 1507 to 15,000 is still far off the parallel market, where the pound was changing hands at about 57,000 per US dollar on Tuesday.

The change will apply to banks, Salameh said, leading to a decrease in the equity of the institutions at the centre of the country’s 2019 financial implosion.

Analysts expect the shift to have less impact on the wider economy, which is increasingly dollarised and where most trades take place according to the parallel market rate.

The pound has lost 97 per cent of its value since it began to split from the 1507 rate in 2019.

Salameh told Reuters that commercial banks in the country “will see the part of their equity that is in pounds decrease once translated into dollars at 15,000 instead of 1500.”

In order to ease the impact of this shift, banks would be given five years “to reconstitute the losses due to the devaluation,” he said.

Salameh said the change to 15,000 was a step towards unifying the country’s multiple exchange rates, in line with a draft agreement Lebanon reached with the International Monetary Fund last year that set out conditions to unlock a $US3 billion ($A4.3 billion) bailout. 

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