The Brightening Economic Climate in the Euro zone Bids Up the Euro while the Dollar Weakens

Lebanese Forex Market 

Despite the recent political shocks in Lebanon following the resignation of the Prime Minister Hariri, BDL’s elevated foreign assets which stood at $43.48B by October 2017, helped reduce the pressures exerted on the pound. As such, demand for the local currency slightly increased over the past week on the Lebanese forex market with the value of the Lebanese Pound trading within the range of $/LP 1,514 – 1,514. 5 with a mid-price of $/LP 1,514.25 , compared to the range of $/LP 1,513.75 – 1,514.25 with a mid-price of $/LP 1,514 last week.

The dollarization ratio of private sector deposits rose from 65.82% in December 2016 to 66.92% by the end of Sept. 2017.

By Friday November 17th, the euro slightly appreciated against the dollar-pegged LP going from €/LBP 1,759.71, last week, to €/LBP 1,774.65, this week.

As for the Nominal Effective Exchange Rate (NEER) of the LBP, it slipped by 0.46% over the past week to close the week at 112.39 points.

International Forex Market:

The dollar weakened on the back of this week disagreements on the proposals among members of the party in Washington which delayed the delivery of the tax cut legislation until next week. Moreover, the Euro’s strong performance throughout the week followed news that Germany’s economy had expanded 0.8% in Q3 2017, up from the 0.6% growth in Q2, while the Eurozone’s total GDP also gained 0.6% quarter-on-quarter.

As such, the Euro-Dollar exchange rate rose from 1.1673, last week, to 1.1772 this week. 

Commodities:

Gold prices increased from $1,272.06/ounce last week to $1,285.21/ounce this week.

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