Lebanon halts favourable dollar withdrawal rate

Lebanon’s central bank announced the suspension of a rule which made it possible for dollar depositors to withdraw their money at a rate more favorable than the official exchange rate, which has suffered a great deal as the country struggles through its worst financial crisis in a long time.

The bank said this newly-implemented rule is in response to an official request from the Shura Council, which is Lebanon’s top administrative court. The council on Monday gave a ruling which made the withdrawals illegal and directed lenders to allow customers withdraw their funds in foreign currency.

A statement issued by the nation’s central bank on Wednesday informed the public that the bank would take steps to get a reconsideration from the Shura Council on the matter.

For over a year, as severe shortage of foreign currency brought on a grave devaluation of the pound, dollar depositors had been allowed to take out funds at the rate of 3,900 pounds to a dollar. It retained the old rate of 1,500 pounds per dollar only for wheat and fuel purchases, which are considered key to the economy to the nation.

The value of the pound has dropped by almost 90% since August 2019, and is now selling at around 12,500 to a dollar in the parallel market.