Lebanon Central Bank sets new rate for withdrawals from dollar deposits

Lebanon’s central bank said on Thursday it had set a new rate of 15,000 Lebanese pounds to the US dollar for withdrawals from bank deposits denominated in dollars, but which can now be accessed largely in the local currency.

The rate was previously set at 8,000 pounds under central bank Circular 151, which implied a “haircut” or loss of more than 80 percent at the current market rate of around 50,000 pounds per dollar. The new rate represents a haircut of around 70 percent.

The central bank also set a withdrawal ceiling of $1,600 per month equivalent in Lebanese pounds for account-holders, who have been unable to freely access their savings since the collapse of the financial sector in 2019.

The central bank had maintained a pegged rate of 1,500 pounds per dollar until the summer of 2019, when it unofficially allowed the currency to become untethered after accumulating tens of billions of dollars in losses.

The pound has since lost more than 95 percent of its value, throwing the majority of Lebanon’s population into poverty and leading to shortages of basic goods such as medicines in the formerly middle-income country.

The central bank officially maintains a rate of 1,500 but almost all goods trade at the market rate. It has said the official rate will be changed to 15,000 Lebanese pounds per dollar in February.