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BEIRUT — Lebanon will weaken its official exchange rate for the first time in more than two decades, a central bank official said, as part of efforts to tackle a crippling financial crisis.

The exchange rate has been officially pegged at 1,507 Lebanese pounds to the dollar since 1997, but will drop to 15,000 to the greenback at the end of October, the official told AFP on condition of anonymity. 

With the Lebanese pound trading at beyond 38,000 to the dollar on the black market — close to a record low — analysts are sceptical that this step could stabilise a currency that has been in free-fall for three years. 

It has lost more than 95 per cent of its value on the black market since the 2019 onset of Lebanon's financial crisis, branded by the World Bank as one of the planet's worst in modern times. 

The decision to devalue the peg follows a visit last week by a delegation from the International Monetary Fund, which is pressing Lebanon to implement reforms to unlock billions of dollars in loans. 

The unification of the country's several exchange rates and the establishment of a credible and transparent monetary and exchange rate system are among the IMF's demands. 

However, analysts noted that a devaluation to 15,000 to the dollar was still far short of that needed to create a unified exchange rate.

"In effect, by declaring a new rate, we add to the multiplicity of rates that already exist," said economist Nasser Saidi.

Parliament this week approved an overdue 2022 draft budget, a move also requested by the IMF.

One of the exchange rates listed in the budget relies on the value of 15,000 Lebanese pounds to the dollar. 

Lebanon is under IMF pressure to implement a raft of reforms before the term of President Michel Aoun expires at the end of October, economy minister Amin Salam has said. 

With no consensus around a replacement for Aoun, who was named in 2016 after a more than two-year vacuum, the process of selecting a new of head state could face delays the country can ill afford.

Lebanon's worst-ever economic crisis has seen poverty rates climb to reach more than 80 per cent of the population, according to the United Nations.

Food prices, meanwhile, have increased by 2,000 per cent since 2019, the World Food Programme says.

Saidi, a former minister and vice governor of the central bank, said the new exchange rate could compound financial woes.

"For ordinary people this means additional inflation [and] an increase in prices accordingly," he noted.

COPENHAGEN — The EU said on Wednesday that leaks from two Russia-Germany undersea gas pipelines appeared to be "a deliberate act", as Moscow said it would call for a UN Security Council meeting over the incident.

The three outflows from the Nord Stream 1 and 2 pipelines have sent natural gas prices soaring, exacerbating an energy crunch in Europe as it stands on the threshold to winter and fanning geopolitical tensions.

Methane gas from the leaks are bubbling to the surface of the Baltic Sea close to Denmark and Sweden in discharges expected to last for a week, until depletion of the gas in the pipelines.

Europe has alleged the leaks are from sabotage, and fossil fuel-rich Norway boosted security at its installations in response.

They "are not a coincidence", EU foreign policy chief Josep Borrell said in a statement. "All available information indicates those leaks are the result of a deliberate act."

He warned: "Any deliberate disruption of European energy infrastructure is utterly unacceptable and will be met with a robust and united response."

Suspicion has focused on Russia, which has cut gas supplies to Europe in retaliation for severe Western sanctions over the war in Ukraine.

But the Kremlin hit back, saying it was "stupid and absurd" to accuse Russia of causing the leaks and calling instead for President Joe Biden to answer whether the US was behind them.

The Kremlin said it would ask for the United Nations Security Council to convene "in connection with provocations" over the pipeline.

EU chiefs Ursula von der Leyen and Charles Michel have both also blamed the Nord Stream leaks on sabotage, as have leaders of several European countries.

Michel tweeted that they "appear to be an attempt to further destabilise energy supply to EU".

He added: "Those responsible will be held fully accountable and made to pay."

The EU is currently mulling further sanctions on Russia for annexation votes imposed on four regions in Ukraine its forces occupy.

Neither of the Nord Stream pipelines are currently operational, but they were full with gas when they were hit with what Swedish seismologists said were "massive releases of energy".

Commenting on the issue, one of the seismologists said "there isn't much else than a blast that could cause it".

Danish Defence Minister Morten Bodskov told reporters in Brussels that "it can easily take one or two weeks for the area to calm down enough" for an inspection to verify the cause.

Two Danish military vessels have been sent to the area.

Non-EU member Norway — which has now overtaken Russia as the biggest supplier of gas to Europe — said it will beef up security around its oil and gas facilities.

"The government has decided to put measures in place to increase security at infrastructure sites, land terminals and platforms on the Norwegian continental shelf," Norwegian Energy Minister Terje Aasland said.

The Norwegian Petroleum Safety Authority earlier this week called for "increased vigilance from all operators and shipping companies on the continental shelf".

Built in parallel to the Nord Stream 1 pipeline, Nord Stream 2 was intended to double the capacity for Russian gas imports to Germany.

But Berlin blocked newly completed Nord Stream 2 in the days before the war.

Germany, which has been highly dependent on imports of fossil fuels from Russia to meet its energy needs, has since come under acute stress as Moscow's supplies dwindle.

Sweden and Poland agree sabotage is the most likely cause of the Nord Stream leaks, with Warsaw suggesting Russia was probably the culprit, to escalate the war in Ukraine.

WASHINGTON — Boosted by rising wages and falling gas prices, US consumers were much more upbeat about the state of the American economy now and in the months ahead, according to a closely-watched survey released on Tuesday.

The consumer confidence index jumped nearly five points to 108.0 the second straight monthly gain, according to The Conference Board. The result was the highest level since April and far better than the modest improvement economists had expected.

The US Federal Reserve has been raising borrowing costs aggressively this year, and last week announced its third consecutive, 0.75 percentage point increase in the benchmark interest rate as it tries to cool the world's largest economy to bring down the fastest inflation in 40 years.

So far progress has been slow, as resilient consumers, flush with savings have continued to spend, supporting economic activity. But the survey showed expectations about inflation fell for third straight month, which is good news for the central bank.

"Concerns about inflation dissipated further in September — prompted largely by declining prices at the gas pump — and are now at their lowest level since the start of the year," said Lynn Franco, senior director of economic indicators at The Conference Board.

Buoyed by a strong job market, respondents felt better about their present situation as well as expectations for the coming six months, the survey showed, but Franco cautioned that "recession risks nonetheless persist".

Intentions to make big-ticket purchases were mixed, with plans to buy cars and appliances increasing, but more reluctance to invest in a home, which Franco said reflected rising mortgage rates and the cooling housing market.

"Looking ahead, the improvement in confidence may bode well for consumer spending in the final months of 2022, but inflation and interest-rate hikes remain strong headwinds to growth in the short term," Franco said in a statement.

Ian Shepherdson of Pantheon Macroeconomics cautioned that the good feelings "might not last as people absorb the hit from the recent drop in stock prices and the Fed's latest rate hikes, with the promise of more to come".

"For now, though, people's views of both the current and future economy have perked up, and the headline index is now just a few points shy of the pre-Ukraine invasion peak," he said.

BEIRUT — Lebanon's parliament on Monday approved the 2022 budget, one of the conditions set by the International Monetary Fund (IMF) to action a bailout for the crisis-stricken country.

Lebanon and the IMF had reached a conditional agreement on a $3 billion loan in April to help the country tackle its economic crisis, but the global lender last week condemned the "very slow" progress Beirut has made towards implementing reforms.

Lawmakers on Monday approved the budget with 63 votes in favour and 37 opposed, the state news agency NNA reported.

The approved budget sets expenditures at 41 trillion pounds (about $1.2 billion according to black market exchange rates), while revenues were projected at 30 trillion pounds.

Among the key changes was a "temporary" doubling of public servants' salaries and pensions, which would now reach a maximum of 12 million pounds (about $324).

The budget has set the dollar exchange rate at 15,000 pounds to the dollar — less than half its rate on the black market — contravening calls by the IMF to unify the various dollar exchange rates functioning across the country.

Lebanon is in the throes of an economic meltdown that the World Bank has branded one of the world's worst crises in modern times.

The IMF has conditioned its loan on a series of measures, including the approval of the budget as well as reforms to bank secrecy laws, restructuring the banking sector and the implementation of formal capital controls.

The head of a visiting IMF delegation last week said the country had yet to implement the needed reforms.

"Despite the urgency for action to address Lebanon's deep economic and social crisis, progress in implementing the reforms... remains very slow," said Ernesto Ramirez Rigo.

LONDON — Markets seesawed and the British pound took a beating on Monday as recession fears brought volatility to the markets.

Having extended losses in morning trading, Frankfurt and Paris edged higher by mid afternoon, only to close the session in the red.

London shares closed flat, paring earlier losses after the pound hit a record low against the dollar on surging fears about the ailing UK economy, before recovering ground.

Further clouding the horizon, the OECD warned the world economy would take a bigger hit than previously forecast next year due to the effects of Russia's war in Ukraine.

"Volatility reigns supreme in a jittery market environment," analyst Patrick O'Hare at Briefing.com said.

Wall Street stocks also fell, amid the upheaval in the foreign exchange market.

The pound on Monday struck an all-time low at $1.0350, days after new UK finance minister Kwasi Kwarteng's inflation-fighting budget.

The Bank of England (BoE) said it was paying close attention to financial markets and would "not hesitate to change interest rates by as much as needed" to curb inflation.

Economists expressed concerns that last week's huge tax-cutting budget from the government of new Prime Minister Liz Truss — aimed at helping the recession-threatened economy — could actually spark massive borrowing and further fuel inflation.

"The market's reactions show that investors have lost confidence in the government's approach, creating a level of volatility that puts the pound on par with some emerging market peers," said Fiona Cincotta, a senior analyst at City Index.

"Attention is now turning to the BoE to step in to support the pound."

Sterling has struggled in recent years as the UK fails to strike major trade deals following its exit from the European Union.

Prior to Monday's crash, the pound suffered a series of 37-year lows against the greenback this month on UK recession fears propelled by sky-high inflation.

The euro has additionally come under heavy selling pressure against the dollar in recent months, as the Federal Reserve hikes interest rates more aggressively than the European Central Bank.

The euro struck a new 20-year low at $0.9554 on Monday before recovering.

A day after Eurosceptic populists swept to victory in Italy's general election, the interest rates on 10-year government bonds hit their highest level for around a decade in France, Germany and Italy.

But the Italian stock market closed higher as markets assessed the future political landscape.

"Time will tell how successful the new government will prove to be but the prospect of some political stability appears to be generating a small relief rally today," said Craig Erlam, analyst at trading platform OANDA.

Elsewhere, the Moscow stock exchange plunged by 10 per cent to its lowest point since Russia began its Ukraine offensive seven months ago as tensions grew across the country over partial military mobilisation.

HONG KONG — Hong Kong announced on Friday it will end mandatory hotel quarantine, scrapping some of the world's toughest travel restrictions, which battered the economy and kept the finance hub internationally isolated.

The long-awaited move brings relief to residents and businesses clamouring for the city to rejoin the rest of the world in resuming unhindered travel and living with COVID-19.

For the past two and a half years Hong Kong has adhered to a version of China's strict zero-COVID rules, deepening a brain drain as rivals reopened.

The announcement leaves mainland China as the only major economy still hewing to lengthy quarantine for international arrivals.

Chief Executive John Lee said the current three days of hotel quarantine would be reduced to zero for those arriving from overseas.

From September 26, travellers will be subject to PCR tests on arrival and will be unable to visit restaurants and bars for the first three days under a system authorities have dubbed "0+3".

"Under this arrangement, the quarantine hotel system will be cancelled," Lee told reporters.

But tourists who test positive on arrival will still be isolated in hotel rooms or government camps.

The government also said it was lifting quotas on arrivals from mainland China — but those going in the opposite direction must still quarantine under Beijing's strict zero-COVID rules.

Recession 

Hong Kong once boasted one of the world's busiest airports but passenger numbers this year are just 3.8 per cent of pre-pandemic levels.

The government faced mounting pressure from residents, business leaders and even some of its own public health advisors to end quarantine, especially after COVID tore through the city at the start of the year.

Since that wave, the number of local infections far outweighed those coming in from overseas.

At its peak, quarantine lasted as long as 21 days and about 113,000 residents have left the city since mid-2021, according to official figures.

The economic toll has been severe.

The city is currently in a technical recession — two consecutive quarters of negative growth.

Finance chief Paul Chan has warned Hong Kong will likely end 2022 in a full recession while the fiscal deficit is expected to balloon to HK$100 billion ($12.7 billion), twice initial estimates.

"For Hong Kong to truly regain competitiveness vis-a-vis other cities around the world, the announcement is not enough; Hong Kong should be totally connected to the world without hindrance," said AmCham President Eden Woon.

Travel rush 

The websites of both Cathay Pacific and its low-cost wing HK Express saw delays as customers rushed to make bookings.

But it is unlikely Hong Kong will see a sudden flurry of mass tourism.

Many global airlines have reduced routes or stopped flying to the city over the past two years.

Cathay currently supplies about 45 per cent of seats into and out of the city, but had previously warned it will only be able to increase routes by one-third this year because of the difficulties in finding staff and planes.

In a statement, Cathay said it would add "more than 200 pairs of passenger flights" in October to both regional and long-haul destinations.

Many of its unused aircraft have been parked in the dry climate of interior Australia to better preserve them.

Even before Friday's announcement, the cost of flights to cities like Los Angeles and London was more than double what they were pre-pandemic.

Rivals reopened 

Although it stuck to China's zero-COVID rules, Hong Kong's experience of the pandemic was not the same as the mainland's.

Like China, Singapore, New Zealand and Taiwan, Hong Kong's travel curbs helped stamp out the virus in 2020 as the pandemic left a wave of death and illness across much of the rest of the globe.

But as an international hub, Hong Kong struggled to keep the virus out indefinitely and could not deploy the kind of city-wide lockdowns used on the authoritarian mainland.

The Omicron variant ripped through mostly unvaccinated elderly victims, overwhelming hospitals that were not adequately prepared.

Despite the tough travel curbs and social distancing rules, Hong Kong had one of the world's highest per capita fatality rates, with nearly 10,000 deaths in a population of 7.4 million.

Taiwan, which said on Thursday it would end quarantine rules in mid-October, has a similar number of deaths but its population is three times the size.

Hong Kong's approach stood in stark contrast to financial rivals such as London, Singapore, New York and Tokyo, which steadily reopened this year.

About 4 million people are expected to visit Singapore this year.

DOHA — France's TotalEnergies on Saturday signed a further $1.5 billion investment in Qatar's natural gas production expansion, which comes as Europe scrambles to find new energy sources to replace Russian supplies.

The French energy giant will have 9.3 per cent stake in the North Field South gas project, the first foreign partner in that section of the vast field, Qatar Energy Minister Saad Sherida Al Kaabi announced, at a news conference alongside TotalEnergies chief executive Patrick Pouyanne.

"Qatar Energy announces the selection of TotalEnergies as a partner for the development of the North Field South," Qatar's official news agency QNA said. "New partners will be announced at a later stage."

Kaabi said TotalEnergies would also help to finance the extraction of gas from North Field South, for which 25 per cent would be reserved for foreign energy firms.

The French firm would take on an "enhanced strategic" role in Qatar's gas expansion, he added.

In June, TotalEnergies agreed a $2 billion deal to take part in the giant North Field East project, that will help Qatar increase its liquefied natural gas (LNG) production by more than 60 per cent by 2027.

Pouyanne, who said Saturday the latest deal would require another $1.5 billion, said his firm would have taken an even bigger chunk of the production if it was possible.

"We need new capacity for sure, and this will be coming at perfect timing," he told reporters.

"Most of the leaders of the world have discovered the words LNG," he said, adding that European countries had to be prepared to strike more long term deals — and possibly pay a higher price to guarantee energy.

"For security of supply, there is a price," Pouyanne said.

Kaabi, who is to meet German Chancellor Olaf Scholz on Sunday during his tour of Saudi Arabia, United Arab Emirates and Qatar, refused to discuss negotiations with European countries, but said some are "more advanced" than others.

He confirmed Qatar was also in talks with Britain.

Shell of Britain, Eni of Italy and United States giants ConocoPhillips and ExxonMobil have also signed up to be part of the North Field East project.

More companies will be announced for the North Field South in coming weeks, officials said, but TotalEnergies will have the largest foreign slice.

Qatar is already one of the world's top LNG producers, alongside the United States and Australia, and LNG from North Field is expected to start coming on line in 2026.

State-owned Qatar Energy estimates that North Field holds about 10 per cent of the world's known natural gas reserves.

The reserves extend under the sea into Iranian territory, where Tehran's efforts to exploit its South Pars gas field have been hindered by international sanctions.

South Korea, Japan and China have been the main markets for Qatar's LNG.

But since an energy crisis hit Europe last year, the Gulf state has helped Britain with extra supplies, and also announced a cooperation deal with Germany.

Europe has in the past rejected the long-term deals that Qatar seeks for its energy, but a change in attitude has been forced since Russia's invasion of Ukraine in February.

Qatar's gas is among the cheapest to produce and has fuelled an economic boom in the tiny state, which has become one of the world's wealthiest countries.

HONG KONG — Asian and European markets sank on Thursday and the dollar rallied after the Federal Reserve (Fed) unveiled a third straight jumbo interest rate hike, said more were in the pipeline and warned the battle against inflation was straining the US economy.

While the three-quarter-point rise was widely expected, there was some surprise at the central bank's forecast that borrowing costs would likely be held above 4 per cent throughout next year.

Fed boss Jerome Powell reiterated his determination to focus on bringing down inflation — which is at a four-decade high — and accepted that the campaign would hit Americans hard.

"We have got to get inflation behind us," Powell said after a two-day meeting of the Fed policy committee. "I wish there were a painless way to do that. There isn't."

He added that "the historical record cautions strongly against prematurely loosening policy" and the Fed would "keep at it until the job is done".

All three main indexes on Wall Street tumbled Wednesday as traders contemplated an era of higher-for-longer rates, which could hit companies' bottom lines.

Asia followed suit, with Hong Kong down at an 11-year low — while Tokyo, Shanghai, Seoul, Singapore, Mumbai, Taipei and Manila also down.

London, Paris and Frankfurt extended the losses in early trade.

However, the dollar continued its strong march higher, striking a fresh 24-year high of 145.90 yen, which prompted the government to embark on a rare intervention to protect its currency.

The US Fed has for months tried to walk a fine line between fighting soaring prices and trying to keep the economy from contracting, but officials accept the chances of success are narrow.

"With the new rate projections, the Fed is engineering a hard landing — a soft landing is almost out of the question," said Seema Shah, of Principal Global Investors.

"Jerome Powell almost channelled his inner Paul Volcker... talking about the forceful and rapid steps the Fed has taken, and is likely to continue taking, as it attempts to stamp out painful inflation pressures and ward off an even worse scenario later down the line."

Volcker used aggressive measures to quell runaway prices in the 1980s, when inflation was last as high as it is now.

Commentators are now betting on a fourth straight 75-basis-point rate hike at the next Fed meeting in November.

All three main indexes on Wall Street tumbled Wednesday as traders contemplated an era of higher-for-longer rates, which could hit companies' bottom lines.

"This meeting once again demonstrates that the Fed is willing to do what is necessary to bring inflation under control. It will slow demand by keeping rates higher for longer — even if this means growth and jobs are lost," said Christian Scherrmann, of asset management firm DWS.

"The current view of the central bankers is still that this will cause a slowdown, but not a recession. We fully agree that bitter medicine to win back price stability is necessary. But we fear its side-effects will be harsher than the Fed is currently projecting."

Fidelity International's Anna Stupnytska said a long-hoped-for change of direction from the Fed "now seems further away", though added that a significant tightening of monetary financial conditions could see an earlier pause in the rate hikes.

The Swiss central bank followed up Thursday with a 0.75 percentage point hike and Norway lifted its rate to an 11-year high. Indonesia and the Philippines also tightened policy.

Investors are now preparing for a large move from the Bank of England later in the day.

Still, the Bank of Japan decided not to shift from its ultra-loose measures owing to its determination to kickstart the country's torpid economy. The decision leaves it as the only major central bank with negative rates, a policy that has sent the yen plunging 20 per cent this year.

However, the currency got a bounce after the finance ministry stepped into the currency markets, pushing the dollar back below 143 yen.

Other currencies were also under pressure, with the euro wallowing at a 20-year low and sterling touching a fresh 37-year nadir of $1.1221.

The greenback was also at multiyear highs on the South Korean won, Chinese yuan, Australian dollar and Canadian dollar, among others.

Oil prices edged up after a rollercoaster on Wednesday.

Both contracts spiked in reaction to President Vladimir Putin's announcement of a partial mobilisation of the Russian army and a veiled threat to use nuclear weapons against the West.

But they soon retreated as investors once again turned to the likely impact on demand from an expected recession across world economies.

WASHINGTON — The Federal Reserve (Fed) opened its second day of deliberations on Wednesday that were expected to produce another big increase in interest rates in a bid to cool the economy and to tamp down the highest inflation in 40 years, but recession fears were still there.

Soaring prices are putting the squeeze on American families and businesses and already have become a political liability for President Joe Biden, as he faces midterm congressional elections in early November.

But a contraction of the world's largest economy would be a more damaging blow to Biden, to the Fed's credibility and the world at large.

Economist Diane Swonk of KPMG warned the central bank will come under increasing pressure, especially if unemployment begins to rise, and Fed officials "will become political pinatas".

Fed Chair Jerome Powell has made it clear that officials will continue to act aggressively to cool the economy and avoid a repeat of the 1970s and early 1980s, the last time US inflation got out of control.

It took tough action — and a recession — to finally bring prices down in the 1980s, and the Fed is unwilling to give up its hard-won, inflation-fighting credibility.

Many economists were expecting a third straight three-quarter point rate hike to come as a result of the meeting, which would be an unprecedented action since that era. 

Powell and other central bankers have been sending the same message: A downturn is better than continued high inflation given the pain that would inflict, especially on those least able to withstand it.

"Since inflation began to accelerate in early 2021, Fed officials have been overly optimistic that it would quickly recede to the central bank's 2 per cent target,” economists Mickey Levy and Andrew Levin wrote in The Wall Street Journal.

"The economy now faces a serious risk of persistent high inflation."

The Fed's policy-setting Federal Open Market Committee (FOMC) was scheduled to announce its decision at 18:00 GMT on Wednesday.

Powell's press conference after the meeting would be closely scrutinised for clues on how much more the Fed would have to do before declaring victory in the inflation fight.

Inflation is a global phenomenon amid the Russian war in Ukraine on top of global supply chain snarls and COVID lockdowns in China, and other major central banks are taking action as well.

US policymakers have the luxury of a strong job market, and low unemployment, which gives it some leeway to tackle high prices.

Even so, many economists say at least a short period of negative gross domestic product in the first half of 2023 will be needed before inflation starts coming down.

Despite a welcome drop in gasoline prices at the pump in recent weeks, the disappointing consumer price report for August showed widespread increases. 

But Ian Shepherdson of Pantheon Macroeconomics, who believes inflation has peaked, said incomes are growing amid rising wages, which bodes well for the outlook.

"The US economy is not in recession or headed there," he said in an analysis.

The Fed has front-loaded its rate hikes, cranking up the benchmark lending rate four times this year, including two straight three-quarter-point hikes in June and July.

The aim is to raise the cost of borrowing and cool demand, and it is having an impact: The housing market has slowed as mortgage rates have surged.

Recent statements from Fed officials indicate more rate hikes were coming, and no cuts until inflation was under control — dousing hopes that had built up in markets following the July policy meeting.

"The irony here is that just as the Fed is ratcheting-up the anti-inflation rhetoric to fever-pitch, the forces needed to drive down inflation over the next year are now in place," Shepherdson said.

Moreover, the FOMC will release the quarterly forecasts from members, which will show how they feel about the direction of the economy and the impact of the policy moves, and how soon inflation will come down.