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 24th 2020.
To-date, the peg continues to be supported by the Central Bank’s total foreign assets which settled at 34.42B in April 2020.
In turn, the dollarization ratio of Private sector deposits surged to 77.94% in March. 2020, up from 70.6% during the same period in 2019.
Over the week ending May 8 2020, the Euro depreciated vis-à-vis the dollar-pegged LP with the currency pair going from last week’s €/LBP 1,653.11 to this week’s €/LBP 1,632.48. In turn, the Nominal Effective Exchange Rate (NEER) of the LBP rose by a marginal 0.43% over the week to stand at 124.22 points in May 8, 2020.
International Forex Market
The Euro/USD currency pair went from last week’s €/USD 1.0966 to €/USD 1.0829 by May 8. In fact, investors are concerned about the Eurozone’s largest economy’s health. In details, the euro-region economy as a whole is forecast to shrink 7.7% this year, forcing up unemployment and public finance. Moreover, Germany’s highest court on Tuesday gave the European Central Bank three months to justify purchases under its bond-buying program, or lose the Bundesbank’s participation in one of its main stimulus schemes.
Commodities
Meanwhile, the increase in international gold prices continued, with the price of an ounce of gold adding a weekly 2.24% to stand at $1,717.69/ounce this week as governments around the world announced important monetary and fiscal stimulus measures to stave off the damage inflicted by Covid-19.
The unprecedented level of government spending is designed to stimulate economies and help consumers pay bills in the face of broad-based business shutdowns and job losses. But the cascade of economic support and sheer size of the stimulus could also lead to massive government deficits which increase investor’s concern who prefer to go for safe havens such as gold.