Lebanese Pound Appreciated Against the Dollar

Demand for the dollar in the Lebanese Forex market weakened during the week as the Lebanese pound’s peg against the dollar went from $/LP 1,506-1,510 with a mid-price of $/LP 1,508 to $/LP 1,504–1,508 with a mid-price of $/LP 1,506. Foreign assets (excluding gold) at the Central Bank increased by a monthly 2.28%, from $37.73B by end-April to $38.59B by end-May. Meanwhile, the dollarization rate of private sector deposits stood at 65.30% in April 2015 compared to 65.71% in December 2014.

The issue of Greek debt strained the position of the euro in the forex market during the past week. The euro lost 0.94% against the dollar to end the week at €/$ 1.1205. In fact, red flags are still up regarding Greece’s ability to honor its $1.7B debt to the IMF and its dues owed to European Central Bank, which most imminently holds a $3.9B bond maturing in July.

Demand for gold registered its third consecutive weekly decline. The price of gold declined from last week’s quote of $1,199.85/ounce to $1,173.23/ounce on Friday. Despite jitters and hesitancy regarding Greece’s negotiations with its creditors, upbeat economic data in the US continues to strengthen the dollar and pushes investors towards the stock markets rather than safe-haven assets like gold.

By Friday 26th of June, 2015, 12:30 pm Beirut time, the dollar-pegged LP appreciated against the euro going from €/LP 1,705.13 to €/LP 1,689.15. The Nominal effective exchange Rate (NEER) gained a weekly 0.22% to 164.12 points, bringing its year-to-date gains to 11.40%.

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