The dollar continued its jump against the Lebanese pound on Sunday in black market trading, while banks and exchange companies settled.
The price of the dollar in Lebanon on the black market rose again to between 9350 and 9400 Lebanese pounds per dollar, up about 50 pounds from yesterday’s trading.
The lira’s decline coincides with the continued absence of any solutions to form a government or restore foreign exchange flow in official channels within the country, as the parallel market continues to recover.
Lebanon needs about $93 billion to save its economy, according to the American Institute for the Defense of Democracy.
Lebanese banks crippled by the financial crisis are struggling with political risks to meet the central bank’s goal of strengthening their defenses by increasing their capital by 20 percent by the end of this month.
According to four banking sources familiar with the situation, less than half of the 12 major banks are expected to meet the central bank’s target requirement set in August to strengthen the sector.
The central bank asked banks in August to set aside provisions for losses equivalent to 1.89 percent of their hard currency deposits with the central bank and 45 percent of government debt bonds, levels that some economists said underestimated the magnitude of the problem.
The Lebanese pound has fallen 80 percent since late 2019 and Moody’s Credit Ratings estimated that losses on international bond portfolios exceeded 65 percent.
Many bankers in Lebanon informally agree that it is necessary to drastically reduce the current banking sector. The sector comprises at least 40 banks and its assets have swelled to 167 percent of the country’s economic output at its last peak in 2015.
The exchange rate of the dollar at the Central Bank of Lebanon remained at 1507.5 lire per dollar, and is allocated only for commodities.
Lebanese banks have set the price of 3,850 lire to the dollar, when the dollar has been withdrawn for small depositors some time ago and is still in effect today.
The Bankers’ Union of Lebanon fixed the exchange rate of the dollar against the Lebanese pound with a moving margin between the price of 3,850 liras for purchase and 3,900 liras for sale at a maximum.