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Cash is king in Lebanon as banks atrophy

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The money exchange shop in Lebanon s Bekaa Valley was buzzing with business. Cellphones pinged endlessly and employees shouted out various rates as customers flocked in carrying plastic bags of the crashing local currency to buy U.S. dollars.

“Welcome to the Wall Street of Lebanon,” grinned the storefront s owner, a machine gun leaning on a rack behind him in case of a robbery.

Cash is now king in Lebanon, where a three-year economic meltdown has led the country s once-lauded financial sector to atrophy.

Zombie banks have frozen depositors out of tens of billions of dollars in their accounts, halting basic services and even prompting some customers to hold up tellers at gunpoint to access their money.

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People and businesses now operate almost exclusively in cash. The local currency in circulation ballooned 12-fold between Sept. 2019 and Nov. 2022, according to banking documents seen by Reuters.

Most restaurants and coffeeshops have hung apologetic signs stating that credit cards are not accepted but that dollars are, at the fluctuating parallel market rate.

COLLAPSING POUND

Lebanese use mobile apps to check on the collapsing pound, which has lost some 97% of its value since 2019.

Fleets of mobile money exchangers zip to offices or homes to carry out transactions. Highways are dotted with billboards advertising money-counting machines.

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With credit cards redundant, people document big transactions by taking pictures of the dollar bills used, fanning them out to show the serial numbers.

Even the largely paralysed Lebanese state is moving towards the cash economy: the finance ministry has considered requiring traders to pay newly-increased customs tariffs partly in cash.

With more bank notes in circulation, crime has risen. Elie Anatian, CEO of security firm Salvado, said yearly sales of safes had grown steadily, with a 15% increase in 2022.

Other businesses are faltering. Omar Chehimi imports smaller shipments for his home appliance shop with cash he has on-hand, since banks stopped granting letters of credit for large ones.

“Even the companies we source from – Samsung, LG – are only dealing with us in cash,” he said, examining a crumpled $20 bill a customer had used to buy an electric heater.

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WESTERN CONCERNS

Any recovery hinges on government action to address some $72 billion of losses in the financial system and revive the banking sector. But politicians and bankers with vested interests have resisted reforms sought by the International Monetary Fund to fix the situation and access international aid.

Paul Abi Nasr, CEO of a textile company, said the cash economy made it “practically impossible” to enforce taxes “because everything can simply stay outside of the banks”.

“The government s ability to be financially sound down the line hinges on this,” he said, adding that the cash economy also risked Lebanon being listed as a country falling short in the struggle against money laundering and terrorist financing.

Western governments, which oppose the role of the heavily armed, Iran-backed Hezbollah group, share those concerns. A Western diplomat said foreign governments were worried illicit transactions would rise as cash was harder to track.

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The U.S. Treasury last week sanctioned Lebanese money exchanger Hassan Moukalled and his business for alleged financial ties to Hezbollah, saying he helped “transfer cash” on its behalf and recruited money exchangers loyal to the group.
 

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Dollar muted as traders await Fed rate decision

Dollar muted as traders await Fed rate decision

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Dollar muted as traders await Fed rate decision

The dollar was pinned near five-week lows on Wednesday ahead of the conclusion of the US Federal Reserve’s policy meeting, with investors awaiting clarity on the path the central bank is likely to take in the wake of global banking turmoil.

Investor attention is zeroed in on whether the Fed will stick to its hawkish path to fight sticky inflation or pause interest rate hikes given recent trouble among banks which has included bankruptcy and last-minute rescues.

The US dollar index, which measures the currency against six peers, was at 103.19, just above the five-week low of 102.99 touched overnight. The euro was at $1.0770, hovering around a five-week high of $1.0789 scaled overnight.

Markets are now pricing in about a 15% chance of the Fed not increasing rates, with a roughly 85% chance of a 25 basis point hike, showed the CME FedWatch tool. Just a month earlier, the market was pricing in a 24% chance of a 50 basis point hike.

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Investor sentiment remained fragile with worries over the outlook for the banking sector starting to ease after sharp volatility in the market in the past few weeks following high-profile U.S. banking failures earlier in the month and the rescue of lender Credit Suisse Group AG at the weekend.

“Markets are seemingly becoming more comfortable with the idea that authorities have probably done enough to prevent a systemic banking crisis,” said Rodrigo Catril, a senior currency strategist at National Australia Bank in Sydney.

“It might be early days, but the price action over the past 48 hours is certainly signalling a change in mood by investors.”

The Fed meeting concludes on Wednesday with the 2 pm EDT (1800 GMT) release of a policy statement followed half an hour later by a news conference by Chair Jerome Powell.

Catril said the Fed faces a difficult choice given a strong labour market alongside February inflation figures that were higher than many market watchers expected. Such circumstances would usually be ripe for a return to a 50 basis point hike were it not for worries over financial stability, he said.

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Christopher Wong, currency strategist at OCBC, said the focus will be on how the Fed communicates its forward guidance, in particular “the higher for longer” rhetoric.

“Ideally, we would like the Fed to go with a 25 basis point hike this meeting, tone down hawkish guidance and emphasize that policy decisions at subsequent meetings will continue to be data-dependent,” Wong said. “This wishlist should see dollar trade on the softer profile and risk proxies trade steadily.”

Meanwhile, the yen strengthened 0.04% to 132.47 per dollar, whereas sterling was last trading at $1.2233, up 0.16% on the day.

The Australian dollar rose 0.36% to $0.6694, while the New Zealand dollar gained 0.11% to $0.6199.

In cryptocurrencies, bitcoin last rose 0.44% to $28,276.58, but was below a nine-month peak it touched on Monday.

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Sui Northern to take special initiatives to ensure uninterrupted gas supply in Ramzan

Sui Northern to take special initiatives to ensure uninterrupted gas supply in Ramzan

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Sui Northern to take special initiatives to ensure uninterrupted gas supply in Ramzan

Sui Northern Gas has announced special initiatives to ensure uninterrupted gas supply to its consumers during the holy month of Ramzan.

The company will be undertaking immediate measures to ensure gas supply with full pressure. SNGPL spokesperson, in a statement, said that domestic consumers will be ensured gas supply with full pressure particularly between 2:30 to 6am and 4 to 9pm.

Spokesperson also stated that company will also ensure natural gas supply other than the mentioned timings. SNGPL has also constituted monitoring teams for immediate resolution of complaints regarding gas pressure.

Additionally monitoring room is being established for gas supply related complaints. SNGPL has requested consumers to consume natural gas wisely during the month of Ramzan.

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Bitcoin climbs to 9-month high as bank turmoil sparks rally

Bitcoin climbs to 9-month high as bank turmoil sparks rally

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Bitcoin climbs to 9-month high as bank turmoil sparks rally

 Bitcoin climbed to a nine-month high on Monday as turmoil in the banking sector drives some investors to turn to digital assets, as the cryptocurrency built on its best week in four years.

The biggest cryptocurrency rose as far as $28,567, its highest since mid-June, and was last up 0.9%, amid growing expectations that central banks would slow the pace of interest rate hikes.

Bitcoin rose 26% last week, its best weekly gain since April 2019, and has soared some 40% in 10 days as turmoil in the banking sector rippled around the globe – culminating, so far, in UBS Group’s takeover of rival Credit Suisse Group AG over the weekend.

Traditional assets such as banking stocks and bonds plummeted on Monday after UBS sealed its state-backed takeover of Credit Suisse, a deal orchestrated in an attempt to restore confidence in a battered sector.

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Top central banks, faced with the risk of a fast-moving loss of confidence in the stability of the financial system, moved on Sunday to bolster the flow of cash around the world. Such a global response has not seen since the height of the COVID-19 pandemic.

“Its stunning rally is the result of the banking crisis, and as the interest rate markets prices in rate cuts in the second half of 2023,” said Tony Sycamore, an analyst at IG Markets, predicting a move towards $32,000 should bitcoin hold above the key support level about $25,000.

Other market players predicted that bitcoin would benefit from central bank efforts to bolster liquidity in the global financial system. It rose to a record of $69,000 in November 2021 after central banks and governments launched unprecedented monetary and fiscal stimulus measures.

“The momentum is all driven by liquidity,” said Markus Thielson at digital asset firm Matrixport in Singapore.

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