Dollar Strengthens as Fed Meeting Minutes Suggest Rate Increase

Lebanese Forex Market

Demand for the dollar on the Lebanese forex market fell over the past week, where the value of the Lebanese pound against the dollar dropped from a mid-price of $/LP 1,514.25 within the range of $/LP 1,514 -1,514.50 to a mid-price of $/LP 1,514 within the range of $/LP 1,513.75 -1,514.25.

Foreign assets (excluding gold) at the Central Bank increased 9.46% since the beginning of the year to $40.60B by September 2016, boosted by the recent swap executed by BDL with the MoF and Lebanese banks. The dollarization ratio of private sector deposits fell from 64.88% in December 2015 to 64.87% in July 2016.

By Friday the 14th of October 2016, the euro depreciated against the dollar-pegged LP over the last week, dropping from €/LBP 1,677.55 to €/LBP 1,661.57. As for the Nominal Effective Exchange Rate (NEER) of the LBP, it rose by 0.23% to reach 264.86 points.

International Forex Market:

The dollar strengthened this week as the Federal Reserve meeting minutes suggested that the Fed may be inclined to execute a rate hike in December. Thus, the euro depreciated against the dollar with the euro/dollar exchange rate dropping from €/$1.1128 to €/$1.1022, this week.

Commodities:

Over the past week, gold prices fell from $1,255.06/ounce to $1,249.58/ounce this week, in line with a stronger dollar.

 14/10/201607/10/2016%ChangeYTD
Euro / LBP           1,661.571677.550-0.95% 
Euro / Dollar1.10221.1128-0.95% 
NEER Index**264.86264.250.23%57.30%

 

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