Demand for the dollar strengthened over the week, as reflected by the Lebanese pound’s peg against the dollar that went down from $/LP 1,508-1,512 with a mid-price of $/LP 1,510 to $/LP 1,510-1,514 with a mid-price of $/LP 1,512 this week. Foreign assets (excluding gold) at the Central Bank dropped a monthly 2.25% from $38.73B at end-November to $37.86B by end-December. Meanwhile, the dollarization rate of private sector deposits stood at 65.68% in November 2014 compared to 66.13% in December 2013.
The euro depreciated against the greenback after the European Central Bank announced that it will implement a quantitative easing policy. This caused the euro to weaken against the dollar by 3.39%, ending the week at €/$ 1.1234.
The increased volatility of financial markets after ECB’s decision to start money printing, in addition to fluctuating oil prices over the week led to an increased demand for gold. The price of gold rose from $1,261.16/ounce on Thursday 15th of January 2015 to $1,301.23/ounce this week.
By Friday January 23rd, 2015, 12:30 pm Beirut time, the dollar-pegged LP appreciated against the euro, rising from €/LP 1,752.92 the prior week, to €/LP 1,693.53. The Nominal effective exchange Rate (NEER) gained 0.99%, over the week to 152.05points, while its year-to-date gain reached 3.21%.