Lebanese Forex Market
Since the onset of national civic protest in October 2019, the imposition of capital controls alongside the deterioration of the economy on multiple fronts has contributed to creating a dynamic foreign exchange 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 and is supported by the Central Bank’s foreign assets totaling $28.17 in mid- September 2020. However, BDL intervenes by namely allowing small depositors to withdraw their dollar savings in LP at the rate of 3,900 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 80.16% in July 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 1,774.30 to €/LBP 1,783.50 by September 18, 2020.
In turn, the Nominal Effective Exchange Rate (NEER) of the LBP recorded a weekly downtick of 0.12% to stand at 127.43 points over the same period.
International Forex Market
The Euro/USD went up from last week’s €/USD 11770 to €/USD 1.1831 by September 18, 2020 as the US dollar weakens. On Friday, the dollar edged lower in Global markets due to disappointing U.S. employment and housing market data. The collapse in U.S. stocks on Thursday also contributed to weakening the dollar.
Gold prices gained this week supported by a weaker dollar and concerns over an economic recovery from the damage inflicted by the coronavirus pandemic that were underscored by elevated weekly U.S. jobless claims data. As a result, Gold prices rose by a weekly 0.52% to close the week at $1,952.41/ounce.
Crude oil prices ended the week on a high note after Saudi Arabia’s oil minister sent a strongly-worded warning to markets at Thursday’s meeting of ministers from the so-called OPEC+ bloc. As such, Brent oil prices rose weekly by 8.09% to $43.3/barrel.