The first day of implementing Lebanon's Central Bank's initiative for intensive currency market intervention ended with a significant success, albeit incomplete. Banks fulfilled many of the exchange requests from individuals and companies to convert Lebanese pounds into dollars at the rate set by the 'Sayrafa' platform, which stands at 24,600 Lebanese pounds per dollar. However, part of the cash dollar deliveries was postponed due to high demand for available quantities.
Banking sources monitoring the situation confirm to "Asharq Al-Awsat" that converting this initial success into a long-term sustainable achievement remains uncertain due to material obstacles linked to the decline in the Central Bank's foreign currency reserves, which have fallen below 10 billion dollars. Nevertheless, these doubts could be alleviated if there is a concurrent improvement in the internal political climate, which could accelerate the formation of a new government and establish internal agreements that reinforce stability as the promising summer tourism season approaches, potentially generating an additional liquidity influx of up to 3 billion dollars.
Notably, the immense liquidity of over 41 trillion Lebanese pounds available in the market suggests that approximately 1 billion dollars could be injected to absorb a significant portion of it (around 25 trillion pounds), thereby preventing the return of speculation on the national currency's exchange rate. However, such decisive intervention from the monetary authority, following the current format of the initiative, will require additional momentum from all political parties, starting with the "safe" election of a new Speaker and Deputy Speaker of the Parliament and the Bureau today, especially amid pressures resulting from a succession of constitutional deadlines leading up to the end of the President's term at the end of October.
As the first phase of intensive intervention operations continues for three consecutive days, bolstered by extended banking hours until 6 PM, a gradual reduction in congestion at banking outlets is anticipated. This could correlate with a similar decrease in demand for cash, enabling the monetary authority to reprogram daily operations and move closer to the desired regularity.
In contrast to the daily disclosures by the Central Bank regarding the total volume of operations through the platform and the rate applied the following day, it is expected that, given the volume and extended hours, a late-night or next-day disclosure will report the volume of operations executed and in process for the first day, preliminarily estimated to reach about two to three times the usual average of around 60 million dollars per day on 'Sayrafa'.
The regulatory measures implemented by banks have allowed operations to flow smoothly, particularly as they adopted uniform criteria for both individuals and institutions in executing transactions, setting transfer request ceilings between 2,000 and 3,000 dollars per individual and around 10,000 dollars per company. This resulted in the immediate distribution of liquidity to as many clients as possible, while others received notifications to collect the cash amounts due in the disbursements allocated for the second day.
Most banks, especially large ones, supported these measures with an emergency arrangement to pay the monthly salaries of significant public sector categories in dollars through ATMs outside banking branches, without the usual exclusive requirement for a hundred-dollar exchange. This was particularly beneficial for members of military and security forces who came in large numbers to collect their allocations and did not need to enter branches to add more Lebanese pounds to acquire the hundred dollars, particularly after banks had supplied smaller denominations.
Under the guise of a typical technical delay in commencing operations in the morning, participants in the informal exchange markets displayed explicit defiance in aligning with the significant monetary shift achieved by the initiative through the expansion of 'Sayrafa' operations. They spread doubts about the initiative's viability and the ability to meet expected demand levels, effectively early on adopting price levels exceeding the exchange rate covered by the Central Bank by about 2,500 pounds, which is over a 10 percent increase.
While active sources in the exchange markets indicated that many street currency traders suffered significant losses from holding dollars at the standard rate by the end of the previous week, and at the higher reported level of around 38,000 pounds, anticipating hefty profits the following week, it was notably observed that even hours after noon, data on the rising dollar price circulated through phone applications and private social media groups, before gradually retracting once it was confirmed that traders refrained from exchanging dollars for pounds at the prices displayed on screens.
In contrast, banking sources, along with those from currency trading circles, expressed skepticism regarding the role of the Central Bank and some banks in maintaining pricing discrepancies between the 'Sayrafa' platform and informal market benchmarks. There are signals and information suggesting that both parties directly engage in accumulating amounts of cash dollars that recipients aim to convert through exchange companies in order to benefit from a profit margin ranging between 250,000 and 300,000 pounds for every thousand dollars exchanged.
Evidence of these dynamics was noted as the exchange rates adopted by money transfer companies collaborating with the Central Bank's currency management remained fixed at 27,000 pounds per dollar, with no adjustments during working hours. This indicates that the dollar transfers received from abroad for families inside Lebanon retained an immediate trading margin at a profit that could be compared to traders in favor of those wishing for conversions into pounds. Notably, these companies also receive additional bonuses to attract as much dollar liquidity as possible for the Central Bank, and occasionally for some banks that need liquidity.
In a related context of managing liquidity and enabling clients to reuse tools that faced significant difficulties in the previous period, the banks' association issued a recommendation to banks to accept checks not exceeding 15 dollars, which beneficiaries can deposit into their accounts, provided the clients agree not to request cashing them or transferring them abroad after collection. Likewise, adherence to the previous nature of account activity and movements must be upheld, particularly for checks drawn payable to any current or retired freelancer from their union's solidarity fund. The association's Secretary-General was tasked with addressing exceptional cases related to specific accounts in coordination with the relevant bank and the authorized trade union representative for this purpose.
