Ali Zain El-Din wrote in Asharq Al-Awsat:
With a little surprise and a lot of prior skepticism, the Central Council of the Banque du Liban decided to extend the work of Circular No. 161 until the end of next February, which allows bank account holders to exchange liquidity in pounds through cash dollars (banknotes) via the “banknote” platform, at the announced price, which currently amounts to 38 thousand. lira.
And while the content of the decision was limited to the usual renewal since its issuance in its first form about two years ago, the markets remained in a state of tense caution after rumors circulated about a trend to raise the reference price on the platform to 45 thousand pounds per dollar, while the immediate cold reaction emerged among money changers and currency dealers. Where exchanges in parallel markets maintained their current price margins, close to the threshold of 58 thousand pounds per dollar.
In parallel, it was not possible to obtain specific answers from senior bank officials with whom Asharq Al-Awsat contacted, regarding the implementation mechanisms that will be adopted, especially in terms of the quantities allowed to be exchanged. However, opinions agreed on continuing to implement the previous “verbal” instructions, which require limiting the beneficiaries to individuals who hold bank accounts and completely withholding them from companies, provided that the replacement amount does not exceed one hundred million pounds, which is equivalent to about $2,600 in cash for each beneficiary.
Regarding the promotion of information about the existence of updated trends with the monetary authority that require the withdrawal of large quantities of the cash mass circulating in pounds outside the Banque du Liban, amounting to an estimate of about 70 to 75 trillion pounds, a concerned banking official confirmed that the governor of the Central Bank, Riad Salameh, had actually obtained something like an official authorization from the Central Bank. Caretaker Prime Minister Najib Mikati, in cooperation with Minister of Finance Youssef Al-Khalil, to take the necessary preventive and procedural measures to ensure the reduction of monetary chaos, and to restore the platform’s pivotal role in managing liquidity in pounds and dollars.
And until the relevant data becomes clear, especially among them the operational proposals that Salameh presented at the Central Council meeting yesterday (Monday), the banking official focuses on the objective link between the exchange rate and the negative or positive pressure effects produced by the existing political conditions, and the sharp vertical divisions in it. Approaching the imminent entitlements, foremost of which is the reorganization of the executive authority, starting with establishing a consensus that guarantees addressing the intractable problem of the presidential vacancy, as well as containing the emerging confusions in the corridors of the judicial authority.
And it was reported that the Governor of the Banque du Liban will, as part of the updated package of measures, intend to stop dollar purchases from money transfer companies and some money changers to cover part of his interference in the dollar’s cash supply through an exchange platform, after he made sure of exploiting this loophole and using it to fuel speculation by maximizing the volume The demand for the green currency in the parallel markets, by taking advantage of prior information related to the volume of daily purchases carried out for the benefit of the Central Bank.
There is a firm conviction among bankers and analysts that determining the realistic exchange rate for the lira is conditional on the concentration of the bulk of trading through the only official platform run by the Central Bank. This path requires, of course, daily coordination with the Ministry of Finance in managing liquidity and controlling its mass. And what the ministry decided to collect in cash for some fees and taxes will contribute to reducing the level of demand for dollars, whether through the platform or through exchange companies.
The banking official points out that the necessities of monetary “discipline”, by checking daily operations and strict adherence to the “know your customer” rules, are not limited to calming the markets that witnessed a massive revolution during the previous days and led to the price of the dollar hitting the threshold of 70,000 pounds. In light of the growing circulation of money, the level of apprehension among international correspondent banks increased from opening outlets for the passage of suspicious operations that fall under the classification of financial crimes through banking channels. This prompted the administrations of most local banks to set special specifications for the implementation of intervention mechanisms to offer dollars by the Central Bank, and later forced it to make them restricted to individual account holders and specific monthly quantities.
In general, bankers hope to recover the real background to the issuance of Circular 161 in the first place. Its aim, according to a disclosure issued by Salameh himself, is to bring the exchange rate of the dollar in the parallel market under control by withdrawing pounds from the market and pumping dollars, and also to enable public sector employees to obtain their salaries in dollars, which achieves the dual purpose of calming the markets, as well as preserving purchasing power. for employees.
