Lebanon devalues pound on Sayrafa platform to shore up parallel market rate

Move seeks to ease the currency's depreciation to record lows on the parallel market

A man counts Lebanese pounds at an exchange shop, in Beirut. The Sayrafa platform rate stood at 31,200 on Dec. 23, the last day of trading. - AP file

By Reuters

Published: Tue 27 Dec 2022, 3:38 PM

Lebanon's central bank announced on Tuesday it was steeply lowering the value of the pound to 38,000 pounds per US dollar on its Sayrafa exchange platform, in a bid to ease the currency's depreciation to record lows on the parallel market.

The central bank said it was also opening currency trading at the new rate to all individuals and institutions, via banks, until further notice after the pound lost value due to currency speculation and the smuggling of dollars outside of the country.

The Sayrafa platform rate - one of multiple exchange rates in Lebanon including a largely-defunct official rate of 1,500 pounds per dollar - stood at 31,200 on Dec. 23, the last day of trading.

It was trading at more than 47,000 pounds to the dollar on the parallel market, the most widely-used rate, and at exchange houses on Tuesday morning, but currency traders said it had fallen to below 43,000 within minutes of the central bank's announcement.

The pound has lost more than 95 per cent of its value since the financial system collapsed in 2019 in an ongoing crisis that the UN says has left eight in 10 people poor and the World Bank has said is orchestrated by the country's elite.

The central bank has regularly issued stop-gap decisions that temporarily ease the currency's fall, but the pound has continued to steadily depreciate long-term as politicians fail to carry out reforms that would unlock an IMF programme seen as key to recovering from the crisis.