Lebanon currency in free-fall

BEIRUT, June 25, (AP): Lebanon’s currency continued its downward spiral Wednesday, reaching a new low before the dollar and raising such alarm that it prompted a powerful politician to call for a state of “financial emergency.”

The Lebanese pound was reportedly selling at 6,200 to the dollar, losing more than 75% of its value. The pound had been pegged at 1,500 to the dollar since 1997.

Despite government efforts to manage the currency crash - including injecting dollars into the market and setting a higher rate for specific transactions - chaos prevailed and the parallel currency market continued to thrive.

Highly indebted Lebanon is in the throes of financial and economic crises, made worse by restrictions imposed to combat the coronavirus in March. Political rivalries have also complicated negotiations with the International Monetary Fund, which the Lebanese government has asked last month for $10 billion in financial assistance.

On Wednesday, veteran parliament speaker Nabih Berri said the crash of the Lebanese pound is a signal for the government, the central bank and private banks to declare a “financial state of emergency” to review measures to protect the local currency. He didn’t elaborate but called the crash “dubious and coordinated.”

Meanwhile, the Lebanese political class has been bickering over hosting a national dialogue that was called for by the presidency following violent protests that threatened to ignite sectarian violence. Rivals of the government of Prime Minister Hassan Diab said they will boycott the meeting, scheduled Thursday. Diab’s government is backed by the powerful Hezbollah group and its allies.