The central role of Banque du Liban (BDL) in currency exchange markets has shrunk dramatically due to the stress brought about by monetary speculation, which mainly feeds on the deepening state of uncertainty experienced by Lebanon.
While BDL is supposed to be a major maker of exchange markets and a controller of cash management in the country, its role quickly turned into a lone goalkeeper fending off fierce attacks by speculators on the price of the Lebanese lira, according to a senior banking official.
Negative speculation has managed to rapidly reduce most of the effects of the decisive intervention initiative in the currency market launched by the central bank on December 27, 2022.
All these factors resulted in the price of the lira sliding to rates close to 50,000 liras for the dollar.
Considering banking and financial fears of larger and more painful repercussions produced by the confrontation between the monetary authority and parallel markets, attention is drawn to deterrent or preventive measures that are expected to be approved by BDL.
These measures follow the “circumstantial” cessation of many banks from accepting new exchange operations through the Sayrafa platform.
The decline in the volume of monetary transactions recorded on Sayrafa during the past week indicates the digital and tangible aspect of the shrinking role of BDL, and thus the bulk of demand was directed to parallel markets.
In the past five days, total sales and purchases carried out amounted to about $322 million, which is equivalent to the volume recorded in one day of the first working week of 2023.
Furthermore, BDL was forced to modify the open intervention to offer cash dollars in exchange for liquidity in liras, which contributed to the formation of a wave of high demand for dollars in the parallel markets.
