Introduction

The deputy governors of the Lebanese Central Bank have offered to move the local currency from fixed to floating by the end of September, according to a copy of their proposal seen by Reuters on Thursday.

Background

In February, the central bank lowered the Lebanese pound’s official exchange rate from its longstanding 1,500 pounds to the dollar to a new rate of 15,000 pounds to the dollar.

The Lira has lost more than 98% of its value in the parallel market since the start of the economic collapse in 2019.

Replacement of Controversial Exchange Platform

Banque du Liban deputy governor Salim Shaheen told Reuters that the central bank will halt the controversial exchange platform known as “Sirafa” after Governor Riad Salameh’s 30-year term ends later this month.

Shaheen said the platform will be replaced by an “electronic exchange rate platform” to be set up by specialized international bodies.

“We are in preliminary negotiations about the choice between Refinitiv or Bloomberg,” he added.

The exchange platform was created in May 2021, 18 months after the start of the economic collapse in Lebanon. Many saw this as a way for the central bank to keep the lira stable, but it continued to decline nonetheless.