Lebanese Forex Market
The Lebanese Pound (LP) remained 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 April 3, 2020.
The peg also continues to be supported by the Central Bank’s total foreign assets, which settled at $35.23B in March 2020.
In turn, the dollarization ratio of Private sector deposits surged to 76.70% in January 2020, up from 70.87% recorded during the same period in 2019.
Over the week ending April 3, the Euro depreciated vis-à-vis the dollar-pegged LP as the currency pair went from last week’s €/LBP 1,659.58to this week’s €/LBP 1,623.68. In turn, the Nominal Effective Exchange Rate (NEER) of the LP rose by a weekly 1.16% to stand at 124.14 points.
International Forex Market
The Euro/USD currency pair went from last week’s €/USD 1.1009 to €/USD 1.0771 by April 3 2020. In fact, the Euro extended a multi-day losing streak against the Pound, Dollar and the majority of the world’s leading currencies and remains poised for further weakness, amidst the market’s growing frustration over the Eurozone’s inability to adopt a united approach to fighting the economic damage caused by the coronavirus pandemic. A joined-up fiscal response is believed to be the most effective response to a dramatic slump in Eurozone economic activity, leading many European nations including France and Italy, to promote the idea of creating a ‘corona bond’ in order to secure fresh funding that would flow to the region’s weakest and hardest-hit economies. A “corona bond” would however mean the pooling of risk by all Eurozone states, leading some Northern European states, most notably Germany, Netherlands and Austria, to resist the idea on the fear that they will ultimately fund the program.
Meanwhile, the fading shortage of dollars in the global financial system thanks to a series of interventions by the U.S. Federal Reserve appears to be a critical driver behind an ongoing recovery in the value of the British Pound. In details, the Fed’s actions appear to have halted a net outflow of capital from the UK which has allowed Sterling to stage a recovery, not just against the Dollar but against the Euro and other global currencies
Commodities
International gold prices this week declined by a weekly 1.02% to reach $1,612.41/ounce.