Saturday, October 09, 2004

BEIRUT: Central Bank governor Riad Salameh said Friday he will continue to support the Lebanese pound as the UN Security Council is studying their options regarding Lebanon and Syria's failure to comply with Resolution 1559.

Salameh, who was speaking at the conclusion of a workshop on banking supervision in Beirut, said that the Central Bank has sufficient reserves to keep the pound stable.

"Defending the pound has become a firm policy of the Central Bank since 1994 and Salameh does not appear to (have any intention to) change this policy under any circumstances," a banker at the workshop said on condition of anonymity.

Salameh has said Lebanon would suffer tremendously if the Central Bank ceased its efforts to keeping the pound stable.

Bankers in general seem unconcerned about the fate of the pound, noting that the Central Bank has some $12 billion in foreign currency reserves, one of the highest levels in the region. In addition to the foreign currency, the Central Bank is sitting on over than $3.7 billion in gold reserves, considered by many as the last line of defense for Lebanon's economy.

"There are enough reserves to weather any pressure on the pound if the Security Council adopted some punitive measures against Lebanon and Syria," the banker said.

But he ruled out the possibility of sanctions in the near future, claiming that the West is more interested in keeping the Lebanese economy stable.

The United States and France are spearheading a campaign to compel Syria to pull out all its troops from Lebanon. They also want Lebanon to deploy its army along the border with Israel and disarm all Lebanese and non-Lebanese militias.

But both the Lebanese and Syrian governments have rejected the demands of the Security Council on the grounds that the withdrawal of the Syrian forces is an internal matter between the two countries.

Salameh said that commercial banks are still enjoying positive growth in their assets and deposits.

Traders said that there is still no rush on the U.S. dollar, despite reports of an imminent World Bank report on Lebanon and Syria. In early weekend trading, the dollar closed at LL1, 514 against the Lebanese pound with traders saying the price is not expected to change anytime in the near future.

By Osama Habib Daily Star staff

© The Daily Star 2004