Lebanon's foreign currency reserves have remained at a record high ensuring that the country can maintain its fixed-exchange rate policy even as Iranian-backed Hezbollah protesters try to topple the government, the central bank governor said.

``Our liquid foreign currency assets are at a historical high of $13 billion despite all the events Lebanon went through in the last six months,'' Riad Salameh said in an interview in his Beirut office yesterday. ``Pressures in the exchange market were moderate at first and now they have completely disappeared.''

Foreign currency reserves hit a record $13 billion in June. They fell when the central bank spent $2.5 billion defending the pound as Hezbollah guerrillas and Israeli forces fought a month- long war during the summer. Reserves have since recovered to record levels amid increased deposits and a $1.5 billion cash infusion from Saudi Arabia and Kuwait to help the pound.

Salameh, who has been central bank governor for about 13 years, said he expects the pound to remain stable and does not anticipate any change to the 11 percent benchmark interest rate.

``The central bank is not foreseeing an increase in interest rates because we don't think that it is warranted as there are no capital outflows from the country,'' he said.

The central bank has kept the Lebanese pound trading between 1500 to the dollar and 1515 since 1999. The stable exchange rate and high interest rates help attract the foreign exchange local banks need to finance the government's budget deficit, which will swell this year to about $3 billion.

Currency Peg

The currency peg, introduced in 1999, helps ensure that many of the 12 million Lebanese living abroad deposit much of their savings in Lebanese banks. Any devaluation of the currency could lead to a flight of funds out of the country. That could cripple banks and push the government to default on a debt that represents 190 percent of gross domestic product.

Lebanon's power struggle started in mid-November after six Hezbollah and allied ministers quit the Cabinet, demanding veto power. The Nov. 21 assassination of Industry Minister Pierre Gemayel exacerbated the confrontation between the anti-Syrian government and the pro-Syrian Hezbollah.

Hezbollah activists have been holding open ended vigils in Beirut since Dec. 1 aiming to topple the government.

As many as 1,200 Lebanese and at least 159 Israelis were killed as a result of the summer fighting between Hezbollah and Israel. Israel bombed Lebanese infrastructure during the fighting and the country's losses are believed to be around $4.4 billion.