September 30, 2019 / 9:28 AM / 21 days ago

UPDATE 1-Lebanese c.bank says new measure will ease pressure on dollar demand

(Adds quotes from statement, Sunday’s protest)

BEIRUT, Sept 30 (Reuters) - The Lebanese central bank will continue to secure the hard currency needs of the public and private sectors at unchanged fixed rates and a circular to be issued on Tuesday will ease pressure on dollar demand, the governor said on Monday.

Riad Salameh, speaking after a meeting with President Michel Aoun, said the circular will organise the provision of dollars to banks at the official rate “to secure imports of petrol, medicine and flour”.

“The circular that will be issued tomorrow will certainly reduce the pressure on dollar demand at currency exchange shops”, Salameh said in a statement from the presidency.

“Banque du Liban is securing the needs of the public and private sectors in foreign currency and will continue in that according to fixed prices that the central bank is announcing without change,” he said.

Salameh did not give further details, saying the mechanism would be explained on Tuesday.

His meeting with Aoun followed widespread protests on Sunday over economic conditions in a country grappling with a stagnant economy and financial strains linked to a slowdown in capital inflows from abroad.

These strains have started to surface in the real economy of late as some importers - including fuel importers and millers - have struggled to exchange Lebanese pounds to dollars at the official exchange rate of 1,507.5 to the dollar.

They have complained of being forced to pay higher rates in a parallel market. Rates of 1,600 or higher were cited last week but two sources said on Monday levels had fallen back to 1,570.

The Lebanese pound has been pegged at its current rate for more than two decades.

The capital Beirut was paralysed during Sunday’s demonstrations as protesters blocked main roads with burning tyres. Roads were also blocked in other parts of the country.

Salameh said Banque du Liban’s relationship would be “with the banks only” and the central bank would not deal directly with the importers.

Finance Minister Ali Hassan Khalil said earlier this month that while there was not much dollar liquidity “in people’s hands” the official exchange rate was being maintained by the banks (Writing by Tom Perry; Editing by Alison Williams & Kim Coghill)

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