Lebanon Navigates Transition from SAYRAFA to Bloomberg Amidst Exchange Rate Concerns

from SAYRAFA to Bloomberg

Lebanon finds itself at a pivotal juncture, as it embarks on a transition from the established SAYRAFA electronic currency exchange platform to the Bloomberg platform. This shift has ignited concerns throughout the nation, particularly concerning the future trajectory of the exchange rate. SAYRAFA has garnered praise for its role in maintaining exchange rate stability over recent months, prompting many to question the implications of this transition.

In response to these concerns, LIMS has offered a discerning perspective, elucidating the critical distinctions among exchange rate unification, stability, and transparency.
LIMS underscores the primary objective behind the shift from SAYRAFA to Bloomberg, which is to augment financial transparency. Market participants granted access to SAYRAFA remain unknown while their access affords them substantial profits, enabling them to acquire US dollars at a considerable discount ranging from 10% to 20%. This differential arises from the disparity between the SAYRAFA rate and the prevailing market rate. Moreover, the mechanisms governing the establishment of the SAYRAFA exchange rate remain opaque. It appears that the exchange rate is subject to discretionary adjustments by the central bank, involving deductions of 10% to 20% from the black-market rate. The shift to Bloomberg is expected to deliver transparency, offering insights into exchange rate determinations and key market participants.

LIMS added that the transition to Bloomberg holds the potential to facilitate exchange rate unification, contingent upon granting all market participants direct or indirect access to the platform through market makers. In this scenario, the black market would disappear, with the Bloomberg exchange rate becoming the singular floating rate within the country. This transition would empower legal businesses to conduct their foreign exchange transactions in a transparent and dependable manner, liberating them from the clutches of the black market. Such transparency is anticipated to mitigate the risks associated with money laundering and terrorism financing, bolstering Lebanon’s financial integrity. On the flip side, should the central bank choose to manage Bloomberg in a manner akin to its approach with SAYRAFA, characterized by restricting market participants and rationing the supply of dollars, Bloomberg would merely metamorphose into another incarnation of SAYRAFA, albeit under a distinct moniker. Such a scenario would erode all the potential benefits outlined earlier.

Finally, LIMS is quick to caution that the platform itself, whether it’s Bloomberg or SAYRAFA, is largely immaterial when it comes to exchange rate stability. The exchange rate is intrinsically tethered to the money supply of the Lebanese pound. Monetary stability hinges upon the central bank’s commitment to eschew financing the fiscal deficit and government expenditures and maintain a steady money supply. Deviation from this path, by contrast, could send Lebanon on yet another devaluation trajectory.

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