BEIRUT: The Central Bank ordered banks to lower interest rates on both U.S dollar and Lebanese pound deposits, as Lebanon grapples with its most severe financial crisis in decades.
In a circular issued Wednesday, Central Bank Governor Riad Salameh called on banks to cap interest rates on dollar deposits at 5 percent and 8.5 percent on Lebanese pounds deposits.
This will be applied to all deposits received or renewed after December 4, 2019. 50 percent of the interest on dollar deposits and dollar-denominated certificates of deposits will be paid in Lebanese pounds, the circular said.
Lebanese banks had raised interest rates in an attempt to attract deposits in foreign currency and maintain dollar reserves.
The majority of Lebanese banks were offering rates of at least 12 percent on one-year term deposits in Lebanese pounds and over 8 percent on dollar deposits.
This policy was seen as an attempt by the central bank to attract foreign deposits to maintain, primarily, the Lira peg.
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