Resignation of the Lebanese government renews pressure on the currency

Pressure renewed on the Lebanese Lira (currency) on Tuesday following the resignation of the government of Omar Karami, suddenly amid people's pressures following the shock resulted from the assassination of the former Lebanese prime minister Rafic Hariri.

Dealers stressed that the Central Bank interfered intensively in the market to preserve the national currency at a rate of 1501- 1014 Lebanon Lira for one USD.

One of the dealers in the market said that demands for the dollars was very high on Tuesday because of fears of a political vacuum as a result of the government's resignation.

He called for making consultations to form a new neutral government quickly, expressing his conviction that the formation of the government will be reflected positively on the market otherwise there will be a problem. The dealers expressed their rejection of the statement of the degree of the Central Bank support to the Lira, but they said that the Bank spent more than $ 800 million in the first three days of dealings made following the assassination of Hariri.

Following the incident, the Lebanese Central Bank vowed to preserve the local currency. The bank said it owns enough reserves in foreign currencies in order to maintain the stability of the Lira.

Dealers are scared that the Central Bank will be obliged to increase interests rate if pressures continue.