Lebanese Forex Market
The Lebanese Pound (LP) continues to be steady within the official range of $/LP 1,514 – 1,514.5 against the dollar with a mid-price of $/LP 1,514.25 by the week ending Feb. 21st 2020.
The peg also continues to be supported by the Central Bank’s solid foreign assets, which settled at $36.66B by January 2020.
In turn, the dollarization ratio of private sector deposits surged to 76.02% in December 2019, up from last year’s 70.62% during the same period.
The Euro almost remained unchanged this week vis-à-vis the dollar-pegged LP as the currency pair went from last week’s €/LBP 1,632.18 to this week’s €/LBP 1,633.84.
In turn, the Nominal Effective Exchange Rate (NEER) of the LP increased by a marginal 0.63% to stand at 120.16 points by the week ending Feb.21st 2020.
International Forex Market
Over the week, the Euro and US dollar both fluctuated on the back of major news and data publications.
In detail, the euro was partially boosted by Markit publishing Germany’s Manufacturing PMI for February which beat estimates standing at a score of 47.8 points, exceeding market expectations of 44.8 and overtaking January’s 45.3 reading. However, the improvement was capped by an eminent German research institute that published results of its survey indicating eroded investor’s confidence in the Euro zone during February 2020. The results mainly came on the back of fears regarding the spillovers of the coronavirus on world trade and particularly on t German exports.
As for the US dollar, it was partly supported by US homebuilding data which recorded a smaller than expected slump in January, while housing permits surged also supporting housing market strength. However, its appreciation was capped with frail HIS Markit flash services PMI out this week and revealing a drop to 49.4 in February, the lowest reading since Oct. 2013 compared to a market forecast score of 53. Moreover, the manufacturing sector barely escaped a contraction, recording a flash reading of 50.8.
Understandably, amid growing uncertainty and concerns over the impact of the corona outbreak mainly, international prices of gold advanced going from last week’s $1,576.1/ounce to this week’s $1,644.4/ounce.