Lebanon’s FX reserves dip in Oct. ’24

Lebanon’s foreign exchange (FX) reserves fell by over $400 million in October, marking the first drop since July 2023, as Banque du Liban spent dollars to stabilise the pound amidst ongoing conflict. The central bank’s liquid reserves now stand at approximately $10.3 billion, excluding $5 billion in defaulted eurobonds.

The economic strain escalated after Israel launched a ground invasion into southern Lebanon in September. The Lebanese economy has incurred an estimated $20 billion in losses by late October, according to Economy Minister Amin Salam.

The reserve depletion represents a reversal from the stabilisation efforts under acting central bank governor Wassim Mansouri, who had shifted to dollarisation strategies, maintaining the pound at roughly 89,500 per dollar.

Lebanon’s economy has been reeling from ongoing crises, with a currency crash and a government default on $30 billion of eurobonds in 2020. The United Nations (UN) warns that the economy may contract by up to 9.2 per cent if the Israeli aggression persists.

Attribution: Bloomberg

Subediting: M. S. Salama