The vice governors of Lebanon’s central bank have proposed lifting the longtime peg on the country’s local currency and moving to a managed float by the end of September.
The details were outlined in a copy of their proposal seen by Reuters on Thursday.
The Lebanese pound has lost more than 98 percent of its value on the parallel market since an economic meltdown began in 2019. In February, the central bank devalued the official rate from the decades-old peg of 1,500 to the US dollar to 15,000.
On Thursday, the central bank’s vice governors met with a group of parliamentarians to propose changes to the country’s monetary policy. Their main proposal was to move to a “managed floating” system to reflect the “real value” of the pound.
Their proposal said the bank would “commit to setting the rules and regulations to move exchange rate into a floating system by end of September 2023, with the ability to intervene when necessary.”
It also proposed setting up a new electronic platform for foreign exchanges. But it said the bank would continue to buy US dollars in the market when possible to avoid leaning on reserves to prop up the pound.
Profligate Spending
Central bank governor Riad Salameh oversaw the country’s pegged currency during his 30-year tenure, which is set to expire at the end of the month.
