Euro Up This Week as ECB Increases Stimulus

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 June, 6 2020.

To-date, the peg continues to be supported by the Central Bank’s total foreign assets which settled at US$33.51B in May 2020.

In turn, the dollarization ratio for private sector deposits increased from 76.02% in December 2019 to 78.94% in April 2020.

In turn, the Euro appreciated against the dollar-pegged LP with the currency pair going from last week’s €/LBP 1,676.22 to €/LBP 1,706.03 by the week ending June, 5 2020. In turn, the Nominal Effective Exchange Rate (NEER) of the LBP fell by a weekly 0.93% over the week, to stand at 121.28 points.

International Forex Market

The Euro/USD went up from last week’s €/USD 1.1119 to €/USD 1.1317 by June 5, 2020. In fact, the currency pair pushed higher over the week partially supported by broad weakness in the US Dollar (USD) and rising optimism following the ECB latest announcement. In details, the ECB decided Thursday to increase its Pandemic Emergency Purchase Program by 600B euros as it attempts to bolster the economy following the coronavirus crisis. The amount comes on top of 750 billion euros of government bond purchases the ECB announced in March, taking the total to 1.35 trillion euros. In addition, the duration of the program will be extended from the end of 2020 until June 2021. Meanwhile, the US dollar was under pressure as widespread protests and riots rocked the US following the death of George Floyd in police custody.


In turn, Gold retreated by a weekly 1.21% to close the week at $1,705.41/ounce. In fact, investors were encouraged to invest in riskier assets this week, with increased optimism over the global economic recovery from the COVID-19 virus as countries continue to loosen lockdowns and restart their economies. However, there are factors like weakness in dollar, trade tensions and risks of a second coronavirus wave that could boost gold prices again as an alternative investment



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