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 May 22nd 2020.
To-date, the peg continues to be supported by the Central Bank’s total foreign assets which settled at US$34.22B in mid-May 2020.
In turn, the dollarization ratio of Private sector deposits surged to 77.94% in March 2020, up from 70.6% over the same period last year.
In turn, the Euro appreciated against the dollar-pegged LP with the currency pair going from last week’s €/LBP 1,627.64 to €/LBP 1,642.42 by the week ending May 22nd 2020. In turn, the Nominal Effective Exchange Rate (NEER) of the LBP fell by a weekly 0.48% over the week, to stand at 123.45 points.
International Forex Market
The Euro/USD went up from last week’s €/USD 1.0797 to €/USD 1.0895 by May 22nd 2020. The currency pair pushed higher over the week, aiding market sentiment towards the Euro after a joint statement delivered by German Chancellor Merkel and French President Macron revealed plans to financially support EU member states struck by the Coronavirus by raising up to €500B (US$550B). The European Commission is expected to outline their proposal before the end of the month. Moreover, the Eurozone’s PMI eased in May as it rose to 30.5 points upon gradual lifting of lockdown across Europe revealing that the slowdown has partly bottomed out. May’s Eurozone PMI results present in fact a stark contrast form the pessimistic April PMI at 13.9. Meanwhile, the US currency, a safe haven, adopted a softer tone this week as investors took heart from promising coronavirus vaccines being developed.
In turn, international gold prices eased their climb this week. Gold retreated by a weekly 0.4% to close the week at $1,734.5/ounce. In fact, investors were encouraged to invest in riskier assets this week, following news on potential coronavirus vaccines. However, the gold price gains surfaced early-on in the week upon news on extensive national stimuli (namely in the EU and the US this week). Large stimulus programs actually enhance the value of gold as a store of value at a time when governments are increasing the supply but reducing the value of paper currencies.