On December 09, 2021, the Lebanese Central Bank (the “BDL”) issued intermediate circular No: 601 (basic decision No: 13377) (the “Circular”) amending article 1 of basic circular number 151 (basic decision No: 13221) (“BDL Circular 151“).
This Circular increased the value of one Lollar[1] from LBP 3,900 to LBP 8,000 effective immediately, marking a 105% increase since April 2020. This increase in the Lollar price is only valid (i) until June 30, 2022 and (ii) within a monthly withdrawal limit of 3,000 Lollars (equivalent to LBP 24,000,000).
Moreover, In an interesting turn of events, the Circular repeals article 4 of BDL Circular 151. This article initially provided that all other banking operations denominated in United States Dollars (meaning other than those prescribed by BDL Circular 151) carried out between the banks and their clients shall remain subject to the official exchange rate of 1,500 (i.e. the rate used by the BDL in its dealings with the banks). We do not have sufficient information at this stage to assess the legal and practical implications of that, but we believe the days of the 1,500 so-called official rate are to be counted.
[1] The term “Lollar” was first used by Lebanese Economist Dan Azzi, and refers to a unit of currency used to designate sums of money deposited with Lebanese banks, theoretically denominated in United States Dollars but restricted from cash withdrawal or international wire transfer outside the Lebanese banking system because of a de-facto capital control imposed by Lebanese banks and/or any other reason beyond the control of Lebanese depositors, as the case may be from time to time.
Click here to download the full circular.
Source: www.bdl.gov.lb
