BEIRUT: Lebanon’s currency continued its downward spiral against the dollar on Thursday, reaching a new low amid financial turmoil in the crisis-hit country compounded by the coronavirus outbreak.
The currency crash came as hundreds of Lebanese – most of them wearing face masks but few keeping a safe distance - crowded outside money transfer offices Thursday, the last day that authorities allowed dollars to be dispensed in cash to customers following new Central Bank rules.
The new rules, detailed in a bank circular released this week, require banks and money transfer offices to convert foreign currency transfers and cash withdrawals from foreign currency bank accounts to the local currency, the Lebanese pound, at market rates determined daily by the bank.
The change is meant to ease demand on the dollar but has instead caused panic among the Lebanese, who have relied on a stable national currency that has been pegged to the dollar for nearly 30 years. The tiny Mediterranean country of about 5 million people has a large diaspora that sends foreign currency home or relies on transfers from here to students abroad. Also, many Lebanese keep their savings in foreign currency.
The Lebanese pound traded between 3,500 and 3,700 to the dollar on Thursday, a sharp jump amid general currency depreciation that began in March. It had been pegged to the dollar at 1,500 pounds since 1990, the end of the country’s civil war.
Lebanon is facing its worst economic crisis in decades, including unprecedented unemployment levels and a severe liquidity crunch. The crisis has been compounded by a nationwide general lockdown, in place for over a month, to combat the spread of coronavirus.
Since late last year, banks have taken various measures to stop a run on deposits, including closing for two weeks last year, limiting withdrawals and money transfers abroad.
But the latest measure, announced by the Central Bank, allowing only cash withdrawals in the local currency, appears to have deepened the panic.
Lebanese have been taking to the streets since October denouncing the government and banks for their inability to address the liquidity crunch and the general economic malaise, and accusing them of corruption. The coronavirus pandemic has only intensified the economic slump.
“It is a game,” said Youssef Abdel-Al, who stood in line outside a money transfer office in Beirut, accusing the banks and the political class of ignoring people’s rights.
Lebanon’s currency crashes amid financial turmoil, virus
https://arab.news/5pm9b
Lebanon’s currency crashes amid financial turmoil, virus
- The currency crash came as hundreds of Lebanese crowded outside money transfer offices
US allows countries to buy Russian oil stranded at sea for 30 days
- US issues 30-day license for stranded Russian oil purchases
- Measure the latest by Trump administration to calm energy markets jolted by Iran war
The United States issued a 30-day license for countries to buy Russian oil and petroleum products currently stranded at sea in what Treasury Secretary Scott Bessent said was a step to stabilize global energy markets roiled by the Iran war.
The announcement comes a day after the US Energy Department said that the US would be releasing 172 million barrels of oil from the strategic petroleum reserve in an effort to curb sky-rocketing oil prices in the wake of the war in Iran. That release was part of a broader commitment by the 32-nation International Energy Agency to release 400 million barrels of oil. The agency said earlier on Thursday that he war in the Middle East was creating the biggest oil supply disruption in history. Bessent, in a statement on X released hours after benchmark oil prices shot above $100 a barrel, said the measure was “narrowly tailored” and “short-term” and would not provide significant financial benefit to the Russian government.
“The temporary increase in oil prices is a short-term and temporary disruption that will result in a massive benefit to our nation and economy in the long-term,” Bessent said in the statement, echoing President Donald Trump.
Thursday’s license, which authorizes the delivery and sale of Russian crude oil and petroleum products loaded on vessels as of March 12, will remain valid through midnight Washington time on April 11, according to the text of the license posted on the Treasury Department’s website. The US Treasury previously issued a 30-day waiver on March 5 specifically for India, allowing New Delhi to buy Russian oil stuck at sea. Among other measures to tame energy prices, Trump has already ordered the US International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf and said the US Navy could escort ships in the region. In another attempt to control prices, the Trump administration is considering temporarily waiving a shipping rule known as the Jones Act to ensure energy and agricultural products can move freely between US ports, the White House said. Waiving the rule would allow foreign ships to carry fuel between US ports, potentially lowering costs and speeding deliveries.
“The president is taking every action he can to lower prices ... unsanctioned oil that’s at sea to get that into the market, continuing to push our own producers to drill and expand production as fast and as far as they can, providing regulatory relief, and you’re going to see more and more in the days to come,” White House Deputy Chief of Staff Stephen Miller told Fox News’ “Primetime” program on Thursday.
There were about 124 million barrels of Russian-origin oil on water across 30 different locations globally as of Thursday, Fox News reported, adding that the US license would provide around five to six days of supply when taking into account the daily loss of oil from the Strait. Trump said earlier on Thursday the United States stood to make significant money from oil prices driven higher by the war, prompting criticism from some lawmakers who accused him of caring only about rich people.
US and Israeli strikes on Iran and the subsequent response by Tehran have widened regional tensions and paralyzed shipping through the Strait of Hormuz, disrupting vital Middle East oil and gas flows and sending energy prices higher.
Raising the stakes for the global economy, Iran’s Islamic Revolutionary Guard Corps says it will block oil shipments from the Gulf unless the US and Israeli attacks cease.
