Lebanon’s central bank governor has suggested he’s struggling to contain the divergence of the pound from its peg to the dollar as the country faces its worst financial crisis in decades, Bloomberg News reported. “No one knows,” Riad Salameh said, when asked how much further the pound would depreciate on the black market. “When I spoke in the past, the dollar hadn’t reached 2,000 pounds,” he said, according to the state-run National News Agency. The pound has been pegged at 1,507.5 to the dollar since 1997.

Lebanon, a politically troubled but upper middle-income Middle Eastern state, is in the midst of a deep financial and political crisis. Banks have been intermittently closed since mid-October and depositors across the country are finding it impossible to gain access to dollar balances, the Financial Times reported in a commentary. While capital controls have not officially been introduced, it seems banks have taken it upon themselves to conserve liquidity and capital by dictating what level of funds clients can withdraw or transfer abroad.

Lebanon’s caretaker Prime Minister Saad Hariri said he discussed with the heads of the International Monetary Fund and the World Bank a possible plan to ease a deepening financial crisis, Bloomberg News reported. Eurobonds rose after Hariri’s office said on Twitter that he asked the two institutions for technical assistance for the plan, which he said would be implemented by a new government. He also asked the World Bank for help in securing trade finance to prevent any shortages of essential goods.

Lebanon’s central bank on Wednesday dramatically lowered interest rates on dollar and Lebanese pound deposits and loans — the latest measure to shore up the country’s banking system amid a burgeoning economic crisis, the International New York Times reported on an Associated Press story. Banque de Liban also announced that for the next six months it would pay 50% of the interest it owes banks on dollar deposits and deposit certificates in Lebanese pounds— a move that would also ease the demand on the dollar.

Lebanon’s central bank plans to slash interest rates in an attempt to ease the country’s economic crisis and is considering formalizing temporary capital controls set individually by local lenders, Bloomberg News reported. Governor Riad Salameh told the Association of Banks in Lebanon that he will issue a circular within days to lower rates “to revive the economy” and limit the increase in “doubtful” loans, according to a document summarizing the meeting and seen by Bloomberg.

Lebanon may have just repaid $1.5 billion of Eurobonds, but its chances of escaping a default still look grim. It will probably come down to how far it can stretch its foreign reserves while containing the worst currency crisis since it pegged the pound over two decades ago, Bloomberg News reported. On both counts, recent developments have been negative. The central bank’s reserves dropped by nearly $800 million in the first two weeks of November alone.

As Lebanon’s crisis-hit bonds flash warnings of a sovereign debt distress ahead, any potential restructuring is likely complicated by the absence of widely-used legal clauses barring bondholders from holding up the negotiations in the courts, Reuters reported. Lebanon is one of the few countries - alongside the Bahamas, Azerbaijan, Macedonia and Poland - to not include so-called enhanced collective action clauses, or CACs, in the legal framework governing its recent bond sales.

The political crisis in Lebanon has sent yields on some of its dollar bonds into triple digits. Rates on the government’s $1.2 billion of notes maturing in March next year have climbed 28 percentage points this week to 105%, Bloomberg News reported. They were at 13% five weeks ago, just before the start of protests that led to the resignation of Prime Minister Saad Hariri and exacerbated the nation’s economic woes. Protesters marched to parliament in Beirut on Tuesday, forcing it to suspend a session as the army and riot police tried to disperse them.

Investors are braced for more losses on Lebanese bonds as Beirut faces urgent calls to restructure its towering debt pile, the Financial Times reported. The value of Lebanon’s sovereign debt has plummeted since rating agencies pushed the dollar bonds even deeper into junk territory earlier this month. The country’s two-year bond has lost a quarter of its value over the past 30 days and now trades at 64 cents on the dollar.