26 January 2011

BEIRUT: The protests and riots and skirmishes which engulfed many parts of the country Tuesday had little impact on the daily banking activity and volume of trading on the Beirut Stock Exchange (BSE), bankers and brokers said.

“It is business as usual for us. As a matter of fact, we noticed that the demand for the U.S. dollar Tuesday fell by 40 percent compared to Monday,” the executive manager of IBL bank Samir Tawyleh told The Daily Star.

Thousands of angry protestors blocked roads with burning tires and set a number of cars ablaze in many parts of Lebanon to protest the designation of MP Najib Mikati as the new prime minister of Lebanon.

This tense atmosphere has caused a lot of concern among some international rating agencies and financial groups who fear that economic growth may decline in 2011 if the situation gets out of control or if the new government distances itself from the economic reforms that were pursued by caretaker Prime Minister Saad Hariri.

However, bankers assured that the conversion from Lebanese pounds to U.S. dollars since the crisis started two weeks ago was not significant as some news media have reported.

Bankers point out that the Central Bank has more than $31 billion in foreign currency reserves in addition to $13 billion worth of gold reserves.

Tawyleh said that thanks to the Central Bank’s CDs the banks were able to meet all the demand for the dollar.

“The interbank operations between banks have helped us a lot and allowed us to meet all the demand. The market is relaxed now and the size of conversions is getting smaller every day,” Tawyleh said. He added that most of the demand for the dollar was from small depositors.

A source told The Daily Star that banks have received instructions from head offices not to transfer accounts from one currency to another unless the date of maturity of the deposit has been reached.

The Central Bank did not say how many dollars it has injected into the local market since the crisis broke out but informed sources said that the amount was relatively small. The Lebanese pound exchange rate usually ranges between a minimum ceiling of LL1,507 to no more than Ll1,514.

Some bankers, who requested anonymity, expressed relief that Mikati had won the post of premier instead of former Prime Minister Omar Karami.

“Mikati is a moderate politician and respected businessman. Karami, on the other hand, is a man of battle and this make us bit uneasy,” one banker told The Daily Star. He added that all rival politicians at the end of the day realize that dialogue is the only choice they have. “I don’t think clashes will erupt in the streets between Lebanese groups. There is too much at stake and all sides will lose,” he said.

Trading on the BSE Tuesday did not see any major shift in investors’ sentiment as the BLOM stock index fell to 1,486.74 points compared to 1,87.48 points, a drop of only 0.05 percent.

Surprisingly, Solidere A and B share rose by 0.47 percent and 0.10 percent respectively to close at $19.09 and $18.91.

Activity at Rafik Hariri International Airport, however, saw a 10 percent drop in the number of passengers arriving to Lebanon.

A well-informed source at the airport told The Daily Star that the number of incoming flights to the airport on Jan. 22 reached 77 flights compared to 79 outgoing flights and the number of passengers arriving on this date reached 3,808 while those departing reached 5,966.

On Jan. 23, the number of incoming flights reached 80 and the outgoing flights stood at 83. The number of arriving passengers on this date was 4,147 and departing at 5,792.

On Jan. 24, the number of incoming flights stood at 78 and departing at 82. The number of arriving passengers on this date stood at 3,069 while 4,627 passengers left the country.

But the source stressed that there were no flight cancellations or any sign of panic at the airport.

Copyright The Daily Star 2011.