SOURCE: GULF NEWS

Beirut: Lebanon’s currency continued its downward spiral against the dollar on Thursday, reaching a new low amid financial turmoil in the crisis-hit country compounded by the coronavirus outbreak.

The currency crash came as hundreds of Lebanese – most of them wearing face masks but few keeping a safe distance – crowded outside money transfer offices Thursday, the last day that authorities allowed dollars to be dispensed in cash to customers following new Central Bank rules.

The new rules, detailed in a bank circular released this week, require banks and money transfer offices to convert foreign currency transfers and cash withdrawals from foreign currency bank accounts to the local currency, the Lebanese pound, at market rates determined daily by the bank.

The change is meant to ease demand on the dollar but has instead caused panic among the Lebanese, who have relied on a stable national currency that has been pegged to the dollar for nearly 30 years. The tiny Mediterranean country of about 5 million people has a large diaspora that sends foreign currency home or relies on transfers from here to students abroad. Also, many Lebanese keep their savings in foreign currency.

The Lebanese pound traded between 3,500 and 3,700 to the dollar on Thursday, a sharp jump amid general currency depreciation that began in March. It had been pegged to the dollar at 1,500 pounds since 1990, the end of the country’s civil war.

Lebanon is facing its worst economic crisis in decades, including unprecedented unemployment levels and a severe liquidity crunch. The crisis has been compounded by a nationwide general lockdown, in place for over a month, to combat the spread of coronavirus.

Since late last year, banks have taken various measures to stop a run on deposits, including closing for two weeks last year, limiting withdrawals and money transfers abroad.

But the latest measure, announced by the Central Bank, allowing only cash withdrawals in the local currency, appears to have deepened the panic.

Lebanese have been taking to the streets since October denouncing the government and banks for their inability to address the liquidity crunch and the general economic malaise, and accusing them of corruption. The coronavirus pandemic has only intensified the economic slump.

“It is a game,” said Youssef Abdel-Al, who stood in line outside a money transfer office in Beirut, accusing the banks and the political class of ignoring people’s rights.