by Dana Halawi
BEIRUT, Jan 16 (NNN-XINHUA) – Some Lebanese officials and experts blame Central Bank Governor, Riad Salameh, for the drop in the exchange rate of the Lebanese pound against the U.S. dollar, after having adopted a fixed exchange rate for the past 30 years.
For the past few months, Lebanese banks imposed restrictions on people’s withdrawal in U.S. currency, creating fear among depositors about their dollar accounts, and prompting them to increase their demand for dollar, which led to a further weakening of the Lebanese pound.
Since banks failed to cater to the demand of depositors for U.S. dollar, people started withdrawing Lebanese pounds and exchanging them at money exchange companies, which created a parallel market with one U.S. dollar sold at 2,500 Lebanese pounds.
Former Interior Minister, Marwan Charbel, accused Salameh of conspiring with exchange companies, by allowing them to increase the price of the U.S. dollar, to generate revenues for exchange companies.
Charbel explained that people can ask their banks to withdraw their U.S. dollar deposits by checks and then exchange these checks from money exchange companies at a lower value, which create a profit for exchange companies.
Charbel urged Salameh to intervene and stop these practices in a bid to restore people’s confidence in the banking sector. He said Salameh is legally allowed to stop such practices.
Elias Hankash, parliament member, accused Salameh of conspiring with exchange companies because he did not use his legal power to stop money exchange companies, who sell the U.S. dollar at a higher price.
Hankash also assured that money exchange companies are getting their U.S. dollar from banks, which means that banks have liquidity in U.S. currency but they are depriving people from their deposits.
Layal Mansour, economist and lecturer at the Lebanese American University, blames Salameh for not being transparent and turning a blind eye to U.S. dollar withdrawals by big depositors, while preventing small depositors from using their dollars properly.
Mansour added that, even if half of the population with small bank accounts went to banks to withdraw their deposits, Lebanon would certainly not have reached this level of deterioration.
Meanwhile, Nassib Ghobril, economist and head of the economic research department at Byblos Bank, attributed the shortage in U.S. dollar to lower liquidity in Lebanese banks, caused by the withdrawal of 10 billion U.S. dollars in Sept, Oct and Nov, 2019.
Ghobril noted that banks closed for around 12 days in Oct, 2019, after the beginning of nationwide protests because of security reasons, which prompted people to run to banks after they re-opened in the first week of Nov, to withdraw their deposits.
“People withdrew big amounts of money because they feared that banks would shut down again, while banks were not prepared for this scenario,” He said.– NNN-XINHUA
