Protests roar back in Lebanon as currency collapse
Demonstrations are back in Lebanon with protesters blocking highways, clashing with police and ignoring curfews brought in to stop the coronavirus pandemic weeks after the three-month revolutionary movement faded from the streets.
A collapse in the Lebanese pound and soaring inflation and unemployment are compounding hardship in Lebanon, which has been in deep financial crisis since October. A shutdown to curb the spread of the new coronavirus has exacerbated economic woes.
Overnight on Monday, banks in the northern city of Tripoli were vandalised and attacked with petrol bombs as crowds angry at the spiralling economic situation made their feelings clear. Meanwhile, in Beirut, politicians continue to bicker as the value of the Lebanese pound continues its dramatic slide.
One of the major grievances of those on the streets is the sudden sharp depreciation in the value of the Lebanese pound against the dollar, which had already lost nearly 40 per cent of its value since late last year.
The banking association declared all banks in Tripoli shut from Tuesday until security is restored, saying banks had been targeted in “serious attacks and rioting”.
Lebanon’s banks have been a frequent target of protesters during the financial and economic crisis that has led to the collapse in the value of the Lebanese pound and frozen savers out of their deposits.
Officially pegged to the dollar at around 1,507, the government is trying to force currency traders not to sell above 3,200 pounds. But market rates have topped 4,000 in some places. At banks, that have brought in strict capital controls and restricted dollar withdrawals for months, the rates offered are far off the official peg sending the prices of goods soaring and the value of earnings down.
Three Lebanese banks have been targeted with small explosive devices in recent days, with a Credit Libanais branch in Tyre hit early on Sunday morning, a Fransabank branch in the southern city of Sidon on Saturday and a firebomb reportedly thrown at a bank in northern Tripoli.
Lebanon’s currency peg, an anchor of financial and social stability for more than two decades, is crumbling and attempts to stabilize the exchange rate are adding to the chaos. Dollar shortages culminated last month in the government’s decision to default on its debt for the first time. Now, a series of new measures imposed by the central bank have made clear that authorities are slowly breaking away from the fixed exchange rate of 1,507.5 to the dollar.
The central bank, also known as Banque du Liban, has incurred losses of more than $40 billion, mainly due to the so-called financial engineering operations it began conducting in 2016 and which boosted its reserves. The premier said it had racked up $7 billion in losses this year, including $3 billion in the last three weeks.
