How far will the fall of the pound on the foreign exchange market continue? This is undoubtedly the question that the majority of Lebanese in general and the country's economic agents in particular have been asking for months now, while the national currency is depreciating to an extent unimaginable less than a year ago, against the backdrop of the serious economic and financial crisis.

Despite the stated ambition of the authorities and the Bank of Lebanon, about two weeks ago, to bring the authorized and illegal stockbrokers to heel, the pound/dollar rate yesterday continued its irresistible rise on the black market, with rates of 6,300 pounds per dollar to buy and 6,500 pounds to sell, according to the site Lebanseslira.org, up 200 pounds from the day before.

As a reminder, these rates were still around 5,000 pounds per dollar in the middle of the month, while the official parity of 1,507.5 pounds to the dollar, officially maintained since 1997, now applies only to a limited range of banking transactions.

The situation is not much more encouraging on the side of approved agents.

Officially, the latter are required to respect the rate set daily by their union, in accordance with a procedure launched in coordination with the authorities at the beginning of the month and reconfirmed on 12 June at the end of an exceptional Council of Ministers devoted to ways of stabilizing the pound on the market.

If the purchase rate was still 3,850 pounds per dollar, against 3,900 on sale yesterday, a level unchanged since June 18, few individuals or companies manage to find an office willing to sell them greenbacks.

Imbalance between supply and demand

"At the moment, only Category A agents (those who can import and export foreign currency) appear to be supplied in dollars by the BDL.

Some of them prefer to close their doors given the monster influx they are forced to manage once opened, "says a source close to the sector.

"The other offices were either closed or open so as not to miss a hypothetical customer who would come to sell them his dollars," she adds.

Last week, many offices were literally besieged by dozens of Lebanese seeking to acquire foreign currency in all cities of the country, with the BDL announcing on the sidelines of the June 12 meeting that it would inject liquidity into the market.

But beyond the franc imbalance between the demand for dollars and the quantities actually available on the market, stockbrokers seem to be gradually distancing themselves from the measures to regulate foreign currency purchases put in place at the beginning of June, reinforced last Monday and modified once again yesterday.

While the majority of the measures – which L'Orient-Le Jour detailed in its Tuesday edition – remained unchanged, the union nevertheless removed the possibility for Lebanese over 18 to buy foreign currency to repay loans taken out of the banking sector and for which they could exchange for their Lebanese pounds a maximum of $500 per month.

The union further clarified that the $1,000 limit that can be provided to a customer wishing to pay for a plane ticket applies to a single person – the amount must be paid directly by the stockbroker to the company from which the customer purchased his ticket.

Reluctance

However, these changes remain derisory compared to the significant flaws identified in this range of restrictions and which, in the absence of an easing of banking restrictions in force for months, risk a little more exploding the demand for currency on the black market.

While the text provides, for example, for certain ceilings for a family to acquire dollars to pay university fees and rent for a child studying abroad, there is still nothing provided to allow parents to send enough to finance the daily expenses of their offspring.

Moreover, the union has still not considered granting foreign nationals working in Lebanon the right to legally acquire foreign currency.

These measures were put in place ahead of the deployment announced by the BDL of "Sayrafa", an application that is intended to be used by stockbrokers in the sector to record all transactions made outside the banking sector.

Its commissioning was announced for June 23 (circular No. 5) and then postponed to the 26th (according to a source close to the Central Bank).

The fact remains, according to several corroborating testimonies, that stockbrokers seem for the moment reluctant to comply with the requirements imposed by their union, which has set for each category of transactions a significant number of supporting documents to be provided that they themselves will have to claim and verify.

Beyond these formal considerations, the fact that stockbrokers have been entrusted with the task of restricting access to foreign exchange on the market poses a real fundamental problem.

"After allowing the Association of Banks of Lebanon to completely illegally and informally restrict Lebanese access to their deposits, the authorities are now sending stockbrokers to the front to cover up their own shortcomings in economic policy and reforms," lche a banking source on condition of anonymity.

"The executive and the BDL want to bring back some of the dollars that came out of the banking sector.

But it will be extremely difficult for them to achieve this by restricting access to foreign currency without taking certain additional measures, such as the total suspension of the use of dollars in transactions on Lebanese territory," she said.

"State of financial emergency"

The source also points to the resistance of the political class to pass a capital control law that meets the requirements of the current crisis, as some bankers demanded at a time when the deterioration of the country's economic and financial situation has begun to accelerate, last fall, or the BDL, at the beginning of the year.

"Regulating capital inflows and outflows would have been more prudent and fair given the seriousness of the crisis of confidence that the country is going through," she regrets, before stressing that "the current anarchy is widening a gap between the privileged who have been able to hide their currencies by taking advantage of the prevailing clientelism and the citizens of good faith who played by the rules."

An economist, who also wished to remain anonymous, wondered why the BDL still distributed dollars to stockbrokers rather than provide liquidity to banks.

"Banks know the needs of their customers and have departments responsible for verifying the compliance of transactions.

Like it or not, the current system has mainly allowed the informal economy and Syrian nationals to siphon off part of the dollars deposited in Lebanese banks," he said.

The deterioration of the situation has in any case provoked a reaction from the Speaker of Parliament, Nabih Berry, who is not, however, a declared supporter of capital controls, as evidenced by previous statements he made on 14 April on the subject.

Yesterday, at an urgent meeting of the cadres of the Amal movement, of which he is the leader, Mr.

Berry said that "the collapse of the pound against the dollar requires the government, the Central Bank (BDL) and the Association of Banks of Lebanon (ABL) to declare a state of financial emergency."

He further stressed that officials should "reconsider" the measures put in place to protect the national currency, believing that they had allowed the black market to "take the Lebanese hostage".