Lebanon to devalue currency by 90% on February 1, says central bank chief

Lebanon to devalue currency by 90% on February 1, says central bank chief

The change will apply to banks, leading to a decrease in the equity of the institutions at the centre of the country's 2019 financial crisis: Salameh

Lebanon's Central Bank Governor Riad Salameh speaks during a news conference at Central Bank in Beirut, Lebanon, on November 11, 2019. — Reuters file

By Reuters Published: Tue 31 Jan 2023, 8:36 PM

Lebanon will adopt a new official exchange rate of 15,000 pounds per US dollar on February 1, central bank governor Riad Salameh said, marking a 90% devaluation from its current official rate that has remained unchanged for 25 years.

The shift from the old rate of 1,507 to 15,000 is still far off the parallel market, where the pound was changing hands at around 57,000 per dollar on Tuesday.

The change will apply to banks, Salameh said, leading to a decrease in the equity of the institutions at the centre of the country's 2019 financial implosion.

Analysts expect the shift to have less impact on the wider economy, which is increasingly dollarized and where most trades take place according to the parallel market rate.

The pound has lost some 97% of its value since it began to split from the 1,507 rate in 2019.

Salameh told Reuters that commercial