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 foreign exchange 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 $29.97 in mid-August 2020. However, BDL intervened by namely allowing small depositors to withdraw their dollar savings in LP at the rate of 3,900 while officially keeping the rate of conversion into US dollars at the pegged rate.
Meanwhile, the dollarization ratio for private sector deposits increased from 76.02% in December 2019 to 79.83% in June 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 1,778.30 to €/LBP 1,785.60 by August 20, 2020.
In turn, the Nominal Effective Exchange Rate (NEER) of the LBP recorded a weekly uptick of 0.01% to stand at 127.51 points over the same period.
International Forex Market
The Euro/USD went up from last week’s €/USD 1.1796 to €/USD 1.1845 by August 20, 2020. The euro rose with the dollar weighed down by concerns over the strength of a U.S. economic recovery following weaker-than-expected jobs data. In details, a larger-than-expected rise in weekly jobless claims in the United States and warnings from Fed officials about a recovery in hiring have raised doubts about how quickly the world’s largest economy will bounce back from the coronavirus. As a result, the euro has been the biggest beneficiary of a recent decline in the dollar, but this tone could be tested with the release of Eurozone manufacturing data later this week.
Commodities
Deterioration in U.S. labour market data, falling bond yields and continued geopolitical tensions continue to support gold. In details, Gold grew by a weekly 1.29% this week to reach $1,934.20 an ounce by August 20, after a surprising uptick in the number of U.S. initial jobless claims saw investors turn to the safe-haven metal.