Lebanon's currency hits new low as banks strike

FILE -- A protester holds Lebanese pounds as he stands in front of burning tires they set on fire, on January 25, 2023, in front of the Central Bank building where the anti-government demonstrators rally against the Lebanese Central Bank Governor Riad Salameh and the deepening financial crisis in Beirut. Angry protesters in Lebanon on February 16, 2023 smashed windows and set tires on fire outside two of the country's biggest banks in the capital city, as the value of the local currency hit a new low and poverty deepens. AP Photo Hassan Ammar, File ASSOCIATED PRESS BEIRUT AP - Lebanon's embattled currency hit a new low Tuesday, trading at an unprecedented 100,000 Lebanese pounds to the dollar on the black market as the country's banks went back on strike.

The pound has been sinking since Lebanon's financial meltdown erupted in 2019 after decades of corruption and mismanagement by the country's political and financial elite. Three-quarters of Lebanon's population of over 6 million people now lives in poverty and inflation is soaring.

The new rate of 100,000 pounds to the dollar was posted on mobile apps Tuesday by private money exchangers. The apps are used by exchange shops and businesses, and authorities have failed to shut down the apps and crack down on a ring of suspected exchangers across the country who run the programs.

The official exchange rate is set by the Central Bank at 15,000 pounds for $1, but the black market rate is now used for nearly all transactions.

With the pound declining, most grocery stores, restaurants, and other businesses have started pricing their goods and services in dollars. It is intended to lower inflation and stabilize the economy, but it also threatens to push more people into poverty and deepen the crisis.

In late 2019, Lebanese banks imposed informal capital controls, restricting cash withdrawals from accounts to avoid folding due to currency shortages. People with dollar accounts could only withdraw small sums in Lebanese pounds, at an exchange rate that was much lower than that of the black market.

The savings of many across the country were effectively evaporated because of this. Angry depositors resorted to armed bank heists, demanding their own money. Others have brought lawsuits from abroad to retrieve their money in hard currency.

Last month, Lebanese commercial banks went on an open-ended strike and angry protesters took to the streets, smashing windows and setting tires on fire outside two of the country's biggest banks in Beirut.

The banks reopened their doors in late February after caretaker Prime Minister Najib Mikati asked to do so for people to retrieve their salaries.

On Tuesday, the banks shuttered doors to customers and slammed Lebanon's judiciary for not correcting flaws in a recent lawsuit against them.

The banks' cautious position has been wrong as the judiciary has issued more arbitrary decisions in recent days, the Association of Banks in Lebanon said last week in a statement announcing the renewal of the strike.

Lebanon has stalled on implementing broad-range reforms agreed to with the International Monetary Fund to access $3 billion in a bailout package and unlock funds in development aid to make the economy viable again.