Dollar exchange premium
capped at 30 percent

Central Bank regularizes parallel market

Money exchangers have been authorized to buy foreign currencies from their clients at a price that does not exceed 30 percent of the rate set by the Central Bank (BDL) for its dealings with the banks, according to a circular issued today by BDL.

BDL said that that this is an exceptional measure that will be effective for six months.

At today’s official rates, this would cap the exchange at LL2,000. But in the parallel market, the dollar offered for sale at exchange counters crossed the LL2,700 threshold.

Money exchangers must abstain from carrying out any transaction that does not conform to the new requirements, according to the circular. At the same time they must not stop their foreign exchange activities and should keep the pace of their operations at the same levels of 2018 and 2019. Those that halt their operations will be barred from the list of foreign exchange institutions, BDL said.

The markup added by money exchangers to the purchase price of the foreign currencies must not exceed customary standards, according to the circular.

Mahmoud Morad Chairman of the Syndicate of Money Changers said that BDL’s decision shocked the market and caused some panic.

Morad said that he will discuss with the Central Bank and the judicial and regulatory authorities on how BDL decision will be implemented.

He said that there are signs that the judicial authorities will enforce the application of this decision more rigorously than in the case of the previous decision taken by the Syndicate of Money Changers. The syndicate had set a ceiling of LL2,000 on the price of the dollar bought by foreign exchange counters.

Morad said that the authorities are determined to crack down on non-licensed money changers.