Lebanon devalues official exchange rate by 90%

Lebanon devalues official exchange rate by 90%

Lebanon has devalued its currency by 90 per cent as it seeks to address a deep economic crisis, in a move that still leaves the pound far above its parallel black market rate.

The Banque du Liban said on Wednesday that it was setting the Lebanese pound, pegged at a fixed rate of L£1,507 to the dollar since 1997, at a new rate of L£15,000. This is still well below the L£60,000 to the dollar where the parallel currency was trading at the time of the central bank announcement.

The devaluation could stoke fears of further price rises in a country where the annual inflation rate for 2022 topped 170 per cent, according to official figures. Analysts said it was a costly stop-gap in the absence of wider structural reforms to Lebanon’s troubled economy.

“Fundamentally these measures don’t meaningfully address the causes of the crisis, which are the large financial sector losses,” said Mike Azar, a Lebanese economist. “What’s been needed for the past three years is a broader economic recovery plan with a restructuring of the financial system, not another piecemeal measure.”

The BdL said the change was a step towards unifying Lebanon’s various exchange rates in an effort to meet the demands