Money changers in protests-hit Lebanon agreed Tuesday to cap the dollar exchange rate at 2,000 pounds as part of efforts to curb the local currency's devaluation on the parallel market.

The Lebanese pound is officially pegged to the greenback at a rate of 1,500 to the dollar but the country's sharp economic downturn has sent the currency into a tailspin in foreign exchange offices.

Money changers have in recent weeks been trading dollars at more than 2,600 pounds.

The Lebanese Money Changers Association said it had agreed with the central bank on "an exchange rate for the US dollar capped at 2,000 Lebanese pounds."

People walk past a money exchange office in the Lebanese capital Beirut
People walk past a money exchange office in the Lebanese capital Beirut AFP / JOSEPH EID

The measure will take effect from Wednesday, it said in a statement.

The cap in the parallel market of foreign exchange offices, however, risks creating a fully illegal black market with higher rates.

The association said the cost of the dollar, used for many transactions in Lebanon such as rents, "exceeds the means of citizens, especially those on low income."

Debt-ridden Lebanon faces its most serious economic crisis since the end of its 1975-1990 civil war.

The country has been rocked by unprecedented, nationwide protests led by young people who blame government corruption and incompetence for the lack of jobs and basic services.