April 23, 2020 / 3:17 PM / a month ago

UPDATE 1-Lebanon parliament speaker sounds alarm on collapsing currency

(Adds quotes, context)

BEIRUT, April 23 (Reuters) - Lebanese parliament speaker Nabih Berry urged the government on Thursday to use its legal powers to halt the “dramatic collapse” of the country’s pound currency before it is “too late,” Lebanese media cited him as saying.

Lebanon’s battered currency has lost more than half its value since October, amid a spiralling economic crisis that has seen dollars dry up and banks impose strict capital controls that have severed Lebanese from their dollar savings.

New central bank rules this week stipulating that banks can pay out stranded dollar deposits in Lebanese pounds at a yet-to-be-determined “market rate” have further angered depositors, many of whom see it likely to hit the value of their savings.

“The government cannot remain a spectator or witness to the financial chaos taking place,” broadcaster Al-Jadeed citing Berri saying. He did not specify what legal powers the government should use to curb the currency’s fall.

The pound slid to new lows on Thursday on the parallel market, the primary source of financing for Lebanese hit by the bleakest economic conditions in decades.

One dealer said the pound weakened to 3,450/3,750 against the dollar by the end of Thursday after trading at 3,350/3,550 in the morning. An importer said he had purchased dollars at 3,500 but could not secure his full needs.

The currency’s descent threatens to hike already rising prices in the highly import-dependent country at a time when unemployment has soared.

Lebanon’s official dollar peg of 1,507.5, in place since 1997, remains available only to importers of fuel, wheat and medicine.

On Thursday, crowds formed outside the money transfer offices of Western Union and OMT after customers were informed it was the last day to retrieve transfers in dollars following a central bank circular requiring they be paid out in local currency.

The central bank said this month a new FX unit would work with banks and certain exchange houses to set a market rate for the pound, but the policy has yet to come into effect. (Reporting by Tom Perry; Additional reporting by Issam Abdallah; Writing by Eric Knecht; Editing by Toby Chopra and Alex Richardson)

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