The Central Bank of Lebanon (BDL) is actively working on launching the new official platform that will provide the exchange rate of the dollar against the Lebanese pound in the market. This initiative, developed in partnership with Bloomberg, seeks not only to replace Sayrafa but also to ensure transparency in the exchange rate. Originally scheduled for late 2023, the launch of the platform has been delayed, and as of mid-2024, it has yet to be introduced. What is the current status of this project?
The BDL’s Central Council is actively working on the development of a new official exchange platform. The main goal of this platform (launched by BDL in 2020) is to replace Sayrafa and become the main market reference for daily dollar exchange rates, all while curbing the surge of the greenback.
The new platform is set to phase out informal websites and applications that currently provide exchange rates. While Bloomberg LP will collaborate on this initiative, BDL will remain the primary decision-making authority. Technical aspects, mechanisms, and especially the drafting of circulars that will regulate the new platform are currently underway, alongside the training of bank employees on the upcoming system.
Sources close to the BDL have informed This is Beirut that the official reason for the delay is attributed to the conflict in Gaza and the highly tense situation along Lebanon’s southern border. However, these same sources disclose that the actual cause behind the delay may lie in concerns that activating the Bloomberg platform without implementing official reforms and capital controls could complicate the management of dollar purchases. There is a looming risk of demand outstripping supply, influencing an upward trajectory in the dollar exchange rate.
Nassib Ghobril, Head of the Economic and Financial Studies Department at Byblos Bank, suggests that neither the current reform context nor the ongoing conflict in southern Lebanon is conducive to the launch of this new platform. Nevertheless, he denies that any pressure was exercised to put off the platform. Furthermore, Ghobril emphasizes that the main aim of the new platform is to accurately and transparently determine the real effective exchange rate of the Lebanese pound against the dollar, relying on continuous exchanges, supply and demand dynamics, rather than interventions or speculative activities.
Hence, to access dollars, importers, who are the main buyers of foreign currency, will need to submit invoices in collaboration with customs and the Ministry of Finance.
The economist underscores that BDL has repeatedly urged the legislative and executive branches to implement reforms, especially laws pertaining to capital controls, bank restructuring, deposits and budget projects, to establish trust and stability conducive to the launch of the new platform.
The role of Bloomberg LP
What exactly is the role of Bloomberg LP? The American financial group and economic information agency will be tasked with providing financial information rather than establishing the platform and its terms of use. "The group will thus be the host of this platform rather than the decision-maker. While the Bloomberg name adds transparency to the platform, all decisions will rest with BDL. Ultimately, the market will dictate the exchange rate," explains the economist.
It's important to note that since August 1st, BDL has suspended currency exchange requests at the Sayrafa rate awaiting the launch of the new platform. Nevertheless, the Sayrafa platform rate (89,500 LL per dollar) is still operational, but the new conversion requests through commercial banks have been suspended.
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