Salameh smiles during an interview with The Daily Star in Beirut, Wednesday, March 28, 2018. (The Daily Star/Mohammad Azakir)
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Central Bank Governor Riad Salameh Wednesday brushed off calls for a managed devaluation of the Lebanese currency, warning that such a step would be detrimental to the national economy.Advocates of managed devaluation argue that this measure aims to bring the prices of national currencies close to market value without the need for the interventions of the Central Banks.Since he assumed the position of Lebanon's Central Bank governor in August 1993, Salameh has pursued a firm monetary policy based on the intervention in the market to protect the national currency from any sharp devaluation.The governor emphasized that one of the best ways to reduce the Central Bank's intervention in the market is to cut the government's deficit to GDP ratio to reasonable levels.If the government managed to reduce the deficit to GDP ratio which currently stands at 10 percent then BDL's intervention in the market will be much less," Salameh said.He added that the more the deficit to GDP is reduced the more the market can be confident of the macro stability of the country and this enables BDL to reduce its intervention.Salameh reiterated that BDL has no plan in the foreseeable future to raise the interest rates on the Lebanese pound after the U.S. Federal Reserve raised the interest on the dollar by 25 basis points.
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