The currency crisis is part of a wider economic meltdown that poses the biggest threat to the stability of import-reliant Lebanon since the 1975-90 civil war.

Lebanese anti-government protesters carry a large national flag and placards during a demonstration near the presidential palace in Baabda, east of Beirut, on June 25, 2020.
Lebanese anti-government protesters carry a large national flag and placards during a demonstration near the presidential palace in Baabda, east of Beirut, on June 25, 2020. (AFP)

The Lebanese pound has tumbled to new lows against the dollar on a parallel market where it has now lost around 80 percent of its value since October on Friday.

Record-low currency

Food importers were being quoted a price of 7,500 to buy dollars, said Hani Bohsali, president of the Syndicate of Importers of Foodstuffs, Consumer Products and Drinks. A second market participant cited exchange rates of 7,300/7,600.

That compares to rates of 3,850/3,900 at licensed foreign currency dealers and the official peg of 1,507.5, which the central bank is still applying for imports of wheat, medicine and fuel.

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Currency needs

The central bank said "liquidity was secured" at the 3,850/3,900 rates in a statement announcing the activation of a new electronic trading platform at licensed currency dealers. Black market volumes were "tiny," it said.

But Bohsali said food importers have only been able to secure 20 percent of their foreign currency needs at the licensed dealers in the last two weeks, leaving them dependent on the parallel market for the rest.

"Food imports are being reduced. It cannot continue this way. If you can't find dollars to import, you don't have any guarantee that if you ship something you will be able to get the funds for it."

The pound has continued to slump despite President Michel Aoun's pledge on June 16 that the central bank would supply the currency market with dollars to prop it up.

Lebanon defaulted on its foreign currency debt in March, citing critically low reserves.

Source: TRTWorld and agencies