(MENAFN) Foreign capital is flooding into Lebanon at a rate of more than 1 billion a month, pushing currency reserves to a record and interest rates on Treasury bills to an all-time low, the central bank governor said.
The country has received 14.5 billion in just 12 months, mainly in remittances from Lebanese living abroad, Riad Salameh said in an interview. Money is pouring into the country after banks elsewhere in the world slashed interest rates on deposits because of the global credit crisis.
It is arriving at such a rate that local banks are struggling to invest it all. The yield on five-year Treasury bills has dropped to 8.3 per cent from 11.5 per cent in one year and would probably have fallen further if the central bank hadn't soaked up liquidity, Salameh said.
About 85 percent of the money that comes into Lebanon is converted into Lebanese pounds, leading the central bank's foreign currency reserves to more than double in one year to a record high of 25.5 billion. That excludes gold reserves.
Bank deposits will increase as much 13 percent this year after gaining about 15 per cent to 82 billion in 2008, said Salameh, who has served as central bank governor since 1993.