Lebanese Forex Market
Since the onset of national civic protest in October 2019, capital controls imposed alongside the deterioration of the economy on multiple fronts contributed to creating a dynamic parallel market in Lebanon.
To-date, the Lebanese Pound (LP) remains pegged to the US dollar within the official range US$/LP 1,514 to 1,514.5 with a mid-price of $/LP1,514.25 which is supported by the Central Bank’s foreign assets totaling $32.96 in June 2020. However, BDL intervened by namely allowing small depositors to withdraw their dollar savings in LP at the rate of 3,850 while keeping the rate of conversion into US dollars at the “official rate”.
Meanwhile, the dollarization ratio for private sector deposits increased from 76.02% in December 2019 to 79.57% in May 2020.
As for Euro/LP currency pair, the Euro appreciated against the dollar-pegged LP with the currency pair going from last week’s €/LBP 1,698.22 to €/LBP 1,720.11 by July 17th.
In turn, the Nominal Effective Exchange Rate (NEER) of the LBP fell by a weekly 0.32% to stand at 128.37 points over the same period.
International Forex Market
The Euro/USD went up from last week’s €/USD 1.1265 to €/USD 1.1410 by July 17th 2020. It is worthy to note that the Euro appreciated on optimism that the European Union summit to be held July 17th may agree on a stimulus package of 750B euros or US$856B (as a recovery fund).
Moreover, the dollar was also partly weakened this week by improved US retail sales data which further shifted the market away from currencies.
Commodities
Gold grew by a weekly 0.4% this week to reach $1,800 an ounce by the end driven by a combination of rising expectations for additional fiscal stimulus in Europe and the U.S. as well as uncertainty over the global economic outlook as the COVID-19 cases continue to rise. In details, the White House and lawmakers face increasing pressure to come up with an additional fiscal stimulus plan ahead of the expiration of supplemental unemployment benefits at the end of the month.