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Explainer: What is behind Lebanon's new exchange rate?

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by al-monitor.com - Adam Lucente -- Lebanese officials devalued their currency on Wednesday amid the ongoing economic crisis. The devaluation is still well below the dollar exchange rate on the street, and multiple rates remain in place in Lebanon. Lebanon’s central bank, Banque Du Liban, lowered the official exchange rate to the US dollar from 1,507 to 15,000 pounds, multiple outlets reported. Bank governor Riad Salameh told Reuters Tuesday that the move constitutes an effort to unify different exchange rates in the country. What it means: The official 1,507 rate for the Lebanese pound was in place from 1997 until now. The rate on the street correlated to the official rate until 2019 when the Lebanese economic crisis began. Since then, the Lebanese pound has lost more than 90% of its value on the parallel street exchange market.

The pound, aka lira, has been falling even more on the street in recent weeks. On Wednesday, one US dollar traded at more than 62,000 pounds. The new official rate therefore does not resemble the rate the public is using, despite the devaluation decision. The official rate and the street rate are two of several dollar-to-lira exchange rates in Lebanon. Banque Du Liban’s Sayrafa rate, which is used for international card payments, ATMs and e-commerce, remains at 38,000 to the dollar, the bank said in a statement Tuesday. There are also separate rates for fuel prices, public sector salaries and other things, according to The Associated Press.

Lebanon to devalue currency by 90% on Feb. 1, central bank chief says

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BEIRUT, (Reuters) - Lebanon will adopt a new official exchange rate of 15,000 pounds per U.S. dollar on Feb. 1, central bank governor Riad Salameh said, marking a 90% devaluation from its current official rate that has remained unchanged for 25 years. The shift from the old rate of 1,507 to 15,000 is still far off the parallel market, where the pound was changing hands at around 57,000 per dollar on Tuesday. The change will apply to banks, Salameh said, leading to a decrease in the equity of the institutions at the centre of the country's 2019 financial implosion. Analysts expect the shift to have less impact on the wider economy, which is increasingly dollarized and where most trades take place according to the parallel market rate.

The pound has lost some 97% of its value since it began to split from the 1,507 rate in 2019. Salameh told Reuters that commercial banks in the country "will see the part of their equity that is in pound decrease once translated into dollars at 15,000 instead of 1,500." In order to ease the impact of this shift, banks would be given five years "to reconstitute the losses due to the devaluation," he said. Salameh said the change to 15,000 was a step towards unifying multiple exchange rates, in line with a draft agreement Lebanon reached with the International Monetary Fund last year that set out conditions to unlock a $3 billion bailout. Several rates remain, including the official rate, the central bank's Sayrafa exchange platform rate which currently stands at 38,000 pounds per U.S. dollar, and the parallel market rate.

Lebanese MPs charged in blast probe file appeals to remove investigator

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By Nada Homsi -- .thenationalnews.com -- Two Lebanese MPs charged in connection with the explosion at Beirut port on Monday filed appeals to have the lead investigator dismissed in the latest attempt by those he has charged to stall the probe. MPs Ghazi Zaiter and Ali Hassan Khalil, members of Hezbollah ally the Amal Movement, filed appeals only days after Judge Tarek Bitar resumed his investigation that had been delayed for months by political interference. The resumption led to more judicial paralysis as another judge ordered him to stop and accusations were made by rights groups that officials were obstructing justice. Attorney for the MPs, Samer Hajj, confirmed the latest move and showed The National a copy of the appeals he had filed. “The first appeal I filed was a form on behalf of both MPs requesting the transfer” of the judge leading the investigation, “and the second was a penal complaint against him by Ali Hassan Khalil”, Mr Hajj said. Mr Khalil accused Mr Bitar of “abuse of power and breach of job duties”. "Judge Bitar’s role in the investigation is a violation of his position, provoking sectarian and racial strife,” the complaint stated.

The MP also accused Mr Bitar of “usurping administrative authority" and committing "the crime of impersonating Lebanon's top prosecutor". Mr Bitar last week cited legal residence and unexpectedly resumed his investigation after 13 months and charged multiple high-profile officials in connection with the blast ― including Prosecutor General Ghassan Oueidat, head of General Security Gen Abbas Ibrahim and State Security chief Gen Tony Saliba. The backlash to those charges was immediate, leading to challenges from within the judiciary itself and a legal tug-of-war. Mr Oueidat maintains that the investigation is still suspended and says Mr Bitar is "rebelling against the judiciary". Mr Bitar, however, cited studies that challenge the suspension’s legality. Mr Khalil and Mr Zaiter were charged in December 2020 by the previous judge leading the investigation into the port blast, Fadi Sawan. Both deny wrongdoing and have refused to attend interrogation hearings.

Startups milk science to make cheese

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Pretty soon, cheese could be all science, no moo. No-cow companies are building "mega factories" and forming partnerships with food giants such as General Mills and Nestlé to meet demand for dairy and prevent cheese shortages. These startups, which include Perfect Day and Remilk, employ precision fermentation tech that harnesses microbes instead of cows to recreate dairy proteins. The animal-free innovations are unfolding as the plant-based food market is set to explode — up from $44 billion in 2022 to roughly $78 billion by 2025.

AL-RAHI CALLS ON BITAR TO CONTINUE HIS WORK, SEEK INT'L HELP

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NNA - Maronite Patriarch Beshara al-Rahi on Sunday threw his support behind the embattled Beirut port blast investigator, Judge Tarek Bitar, calling on him to “continue his work” despite the recusal lawsuits and the latest judicial standoff. “We hope that Judicial Investigator Judge Tarek Bitar will continue his work to unveil the truth and issue the indictment,” al-Rahi said in his Sunday Mass sermon, asking Bitar to “seek the assistance of any international authority that might help in uncovering the truth.”

Al-Rahi also lamented that “the meetings of judicial bodies are witnessing a lack of quorum, with judges and public prosecutors defying the Higher Judicial Council and its head and refraining from attending the meetings.” “This is unacceptable! The judiciary has its mechanism and hierarchy,” the patriarch added. “Judges are rebelling against their authorities instead of rebelling against politicians. They are overbidding against each other, impeding the investigations of each other, releasing suspects en masse and arresting the relatives of the port victims,” al-Rahi decried, in an apparent jab at some judges, especially at State Prosecutor Judge Ghassan Oueidat. He added: “They are undermining the norms of raiding, summoning and subpoenaing; reversing their rulings; bowing to those who have influence; violating sovereign laws; breaching the investigations’ confidentiality in front of foreign nations before knowing their true motives; implicating themselves in plots of grudges and vengeance; showing strength against the weak; showing weakness toward the strong; and smuggling foreign (dual national) detainees.” “We will not allow the port bombing crime to go without punishment, no matter how much time passes and how many rulers change,” al-Rahi vowed. --- Naharnet

Qatar replaces Russian company in Lebanon gas exploration

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Beirut: Lebanon caretaker prime minister HE Najib Mikati described QatarEnergy's acquisition of 30% exploration rights in two offshore areas off the coast of the Republic of Lebanon as exceptional, given the experience and position that QatarEnergy has reached in the global oil and gas industry. During his meeting on Sunday with the Minister of State for Energy Affairs, President and CEO of QatarEnergy HE Eng. Saad bin Sherida Al Kaabi, the Lebanese caretaker prime minister said that the start of exploration and petroleum activities in the Lebanese waters would have a positive impact on the short and medium terms in regards to providing opportunities for Lebanese companies interested in the petroleum services sector. It would also provide job opportunities for Lebanese youths, especially those working in the technical field. Mikati added that TotalEnergies - which owns a 35% stake, in addition to Eni - which owns a 35% stake, would start drilling operations in Block 9 after completing the environmental surveys, drilling-related operations, and the launch of logistical operations in Beirut Port.

Sources in the Lebanese Ministry of Energy say that Novatek justified its move by saying that the US sanctions imposed on Russia had a negative impact on it, and that it was no longer able to make any financial transfers outside Russia. This is logical, especially since Novatek’s role in the alliance is one of an investment partner, not a technical one.

Could the latest decision have been taken after consultations between the three companies took place, in light of the pressures the Russian company is facing from the United States due to the Russian-American war, so that “Total” and “Eni” can continue the work required of them? Or was there a “settlement” between the three companies, fearing that Total and Eni would be subject to US sanctions because of their dealings with the Russian company? This is highly probable, especially since Total and Eni sent books of similar content to the Ministry of Energy following the Novatek book, in which they confirmed that they would continue their contractual obligations regarding exploration in blocks 4 and 9, and that they are ready to discuss the rights of others in the coalition.

BEIRUT (AP) By Bassem Mroue — Lebanon, two international oil giants and state-owned oil and gas company Qatar Energy signed an agreement Sunday that the Qatari firm will join a consortium that will search for gas in the Mediterranean Sea off Lebanon’s coast. The deal inked in Beirut brings Qatar into Lebanon’s gas exploration market three months after Lebanon and Israel signed a U.S.-mediated maritime border agreement ending a yearslong dispute. Qatar Energy is replacing a Russian company that withdrew from the Lebanese market in September. In 2017, Lebanon approved licenses for an international consortium including France’s TotalEnergies, Italy’s ENI and Russia’s Novatek to move forward with offshore oil and gas development for two of 10 blocks in the Mediterranean. The borders of one of the two blocks were disputed by neighboring Israel until a maritime border deal was reached last year. The companies did not find viable amounts of oil or gas in block No. 4 north of Beirut, and drilling in block No. 9 in the south has been repeatedly postponed because of the dispute with Israel.

Lebanese banks ‘could recover within 5 or 10 years with astute planning’

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By Sarah Glubb - arabnews.com -- LONDON: The financial crisis in Lebanon could be resolved within five to 10 years if a “well thought out program” is implemented that takes care of small depositors, addresses the needs of medium-sized ones and brings big depositors on board as partners in new banks, according to a finance industry expert in London. The Lebanese economy has “continued to deteriorate to untenable levels,” according to the International Monetary Fund. Per capita gross domestic product fell by 36.5 percent between 2019 and 2021, and is expected to contract even further this year. “They could have had a quicker recovery had they started earlier,” said George Kanaan, CEO of the Arab Bankers Association, a nonprofit professional organization in London whose members work in banking and related industries in the Arab world and the UK. “But three years have passed and nothing has happened.”

Kanaan, head of the ABA since 2009, has worked for prominent banks in New York, London and Saudi Arabia since 1975. He said it is not unusual that one or two banks might fail in a country, or perhaps a segment of the industry or a specialty sector, “but for a system to fail entirely is almost unique in history.” The Lebanese pound has lost approximately 90 percent of its value during the economic crisis in the country and continues to tumble to record lows, reaching above 60,000 pounds to the dollar on Friday. “We would like to see joint action by the (big) depositors to work with the banks, the government and the IMF, if they can be brought in, to restructure a system that has failed — and the failure of the system was comprehensive,” Kanaan told Arab News during an exclusive interview. He said that corruption and a waste of revenues and resources actually played only a small part in the failure, and that the financial system collapsed mainly as a result of the incompetence of its management, particularly at the nation’s central bank, Banque du Liban.