Foreign currency reserves
dropped by $400 million

First decline since July 2023, offset by rise in Gold reserves

The Central Bank (BDL) reported a sharp decline in its foreign currency reserves in October, with a decrease exceeding $400 million. This marks the first decline since July 2023.

BDL’s liquid reserves now stand at approximately $10.3 billion, a drop attributed to efforts to stabilize the lira amid escalating war. BDL has to dip into its reserves and intervene on the market in order to prevent a devaluation of the currency.

BDL held $25.6 billion worth of gold at the end of October, an increase of $1.15 billion due to a rise in international gold prices.

During the summer, Lebanon saw a surge in remittances and spending by members of the Diaspora who visited the country, contributing to an increase in reserves. BDL had capitalized on this influx, generating an additional $1.7 billion through foreign exchange transactions.

However, the current downturn reflects the severe impact of the war on the country’s already struggling economy. The depletion of reserves could lead to heightened inflation, further depreciation of the lira, and worsening living conditions for the population.

“The situation is precarious. While the central bank’s interventions have provided temporary relief, the war’s extended duration and its economic fallout could undo the progress made earlier this year,” said a source at BDL.

In late October, $1 billion in aid was pledged at an international conference convened in Paris. These funds are not yet reflected in BDL’s balance sheet.