Lebanon’s currency loses value after OPEC cuts oil prices

LAGOS, Nigeria (Reuters) – Lebanon’s central bank on Wednesday cut the benchmark lira, which is the only legal tender in Lebanon, to 6,000 dinars as the OPEC cartel agreed to freeze output for a second straight month.

The move, seen as a significant blow to OPEC’s attempts to revive prices, is likely to prompt a second cut in the Lebanese dinar.

The bank cut the official rate to 6.5 dinars from 8.25, or 5 percent.

It also cut the value of the national currency to 1.9 dinars.

The lira has lost about half its value against the U.S. dollar since January, when Saudi Arabia and Iran cut output in a dispute over oil prices.

OPEC has pledged to continue pumping oil to help keep oil prices from dropping further.

The group’s decision to suspend production at the end of the month has also been seen as an attempt to pressure Iran, which has been trying to maintain its dominance in the region by imposing strict curbs on oil exports.

The U.N. sanctions on Iran were imposed after the country’s nuclear program was discovered in 2010.

The latest round of production cuts by OPEC members has been seen by traders as a major setback for Saudi Arabia, which faces a growing challenge from rivals such as Iran.

It is also the first time that Saudi Arabia has cut production since it halted oil production in 2016.

The central bank cut its benchmark interest rate to 5.75 percent from 6.75 per cent, and it raised its cash rate to 3.75 from 3.3 per cent.

It cut its key interest rate from 3 to 2.75 to ease the pressure on its sovereign bonds, and its key deposit rate from 2.5 to 1 to ease lending to the oil sector.

The Lebanese dinars traded on the Nasdaq in New York.

The price of a pound of Lebanese currency has declined 8.4 percent in the past two months to $1.1264.

The International Monetary Fund said on Wednesday that oil prices had recovered from the slump of 2015 and the outlook for crude prices was “very positive.”