A man counts Lebanese pounds at an exchange shop, in Beirut, Aug. 20, 2018. (AP Photo/Hussein Malla)
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The political paralysis in Lebanon triggered some conversion to dollar deposits and a drop in the prices of sovereign Eurobonds in the month of October, a leading banker revealed Monday.As of September, 68 percent of bank deposits in Lebanon were in dollar accounts.The Central Bank, sitting on $41 billion in foreign currency reserves, usually intervenes in the market to ensure that the local currency remains stable. According to Bank Audi's Lebanon Weekly Monitor, Lebanon's capital market last week witnessed extended price falls on the Eurobond market, while the equity market registered price gains along with increased activity, and the FX market saw net conversions in favor of foreign currencies.International investment bank Goldman Sachs, in a report released Monday, also underlined the importance of reducing the budget deficit to relieve the market and diminish the dependence of the Treasury on the support of the Central Bank.Goldman Sachs noted that commercial banks' liquid assets, estimated at $10.3 billion, can only finance the external funding gap for less than two years.It added that if deposit growth and remittances do not rise significantly in the next three years, the Central Bank can finance the external funding gap until 2021 .
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