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No shortage of cash at ATMs ... for the time being: banks

“Down with the rule of the banks,” as women eat sandwiches at the protest in Downtown Beirut, Oct. 20, 2019. (The Daily Star/Mohamad Azakir)

BEIRUT: Lebanese banks assured Monday that customers can still withdraw funds from ATMs across the county despite the closure of the lenders for the past five days due to the anti-government protests.

Bankers interviewed by The Daily Star said that customers can use their debit and credit cards to purchase all their needs during the closure of the branches.

“There is sufficient cash at the ATMs in most branches. But of course if the paralysis in the country continues then cash will run dry. However, we will try to send our staff to the branches to fill ATMs with cash even if the roads remained blocked by the protesters,” one banker explained.

The five day protests have crippled the country and shut down most businesses.

There are no official figures on the total cost of the closure but some experts estimate that the losses are very big.

There is some concern that the if the political showdown between the government and the protesters degenerates into a bloody confrontation then there will be a huge run on the U.S. dollar.

“I hope that both parties end this standoff in a peaceful way. But if the situation deteriorated then I fear that the Lebanese pound will come under pressure,” another banker said.

Lebanon faced a serious dollar liquidity crunch before the protests erupted. Most exchange dealers exchanged the dollar at more than LL1,600 and in some cases the price reached LL1,650.

It is not clear if Central Bank governor will take pre-emptive measures after the end of the protests to protect the pound from any unforeseen problems.

Bankers stressed that they will coordinate with BDL to supply the lenders with enough dollar cash to meet the demands of the customers. BDL usually intervene in the market in case there was a rush on dollars.

On Oct. 3, Salameh dismissed rumors that the Lebanese pound was under threat, stressing that BDL did not interfere in the operations of exchange dealers in Lebanon. Speaking at the opening of the 9th Edition of Lebanon’s Corporate Social Responsibility at the Four Seasons Hotel, Salameh said the rise in demand for dollar banknotes led to an additional cost ranging between 1 and 3 percent in relation to the prices in banks.

“Some took advantage of this situation and used ATMs to withdraw dollars and credited to their account in lira, and then sold to money changers for profit, and deposit the amount in pounds again in the ATM,” the governor explained.

Salameh was alluding to the shortage of dollar banknotes in the market in the past few days due to the unusual withdrawal of this currency from ATM machines.

But the recent circular by BDL to organize the import of wheat, gasoline and medications has gradually restored confidence in the pound and eased demand for the dollar.

“Many are talking today about the difference between the lira exchange rate with banks and money changers. But if we go back in history, we can see that this difference has always existed. Sometimes, the price of money changers was lower than the price of banks, and sometimes more. BDL only intervenes in terms of regulations,” Salameh said.

 
A version of this article appeared in the print edition of The Daily Star on October 22, 2019, on page 3.

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