| 02/10/2020 | 25/09/2020 | %Change | YTD | |
| Euro / LP | 1,763.17 | 1,756.10 | 0.40% | – |
| Euro / Dollar | 1.1696 | 1.1649 | 0.40% | – |
| NEER Index | 128.68 | 128.53 | 0.12% | 9.30% |
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 have 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 depreciated against the dollar-pegged LP with the currency pair going from last week’s €/LBP 1,756.10 to €/LBP 1,763.17 by October 2, 2020.
In turn, the Nominal Effective Exchange Rate (NEER) of the LBP recorded a weekly uptick of 0.12% to stand at 128.68 points over the same period.
International Forex Market
The Euro/USD went down from last week’s €/USD 1.1649 to €/USD 1.1696 by October 2, 2020.
The Euro (EUR) struck higher on Tuesday, as improving market sentiment helped to temper safe-haven demand and improvement in risk appetite elevated the Euro to US Dollar exchange rate.
However, the Euro’s gains were still covered by the publication of Germany’s latest consumer price index as they revealed Europe’s largest economy slipped into a state of deflation again this month. Turning to today’s updates, the Euro may look to extend these gains after data revealed German retail sales rebounded far faster than expected last month. Meanwhile, Germany’s unemployment rate for September came in better than expected at 6.3%, down from 6.4%, which may offer Euro exchange rates some support.
The move for the dollar comes after the US presidential debate between President Donald Trump and former Vice President Joe Biden, which has left the Euro to US Dollar weaker so far this morning. However, the Euro-to-Dollar rate lifted upwards when President Donald Trump said he has contracted coronavirus today. The question is to what extent will the Euro be at risk after the US elections next month.
Commodities
Gold moved up this week by 1.98% to reach $1,905.049/ounce. This rise in Gold took place as the pace of U.S. private sector job growth in September which was the strongest in three months where Private-sector employment rose by 749,000 jobs. The marked depreciation of the USD caused gold to rise up until last night as well, though gold fell again when the dollar subsequently began to appreciate. Gold prices highs were also affected by lower commodity prices due to slower world growth.
Euro and most notably UK gold prices in Pounds per ounce pushed up as the European Union announced that it is taking the British government to court for breaking their EU Withdrawal Agreement, but UK “insiders” said a Brexit trade deal is now in sight ahead of end-December.
Crude oil prices slipped this week by 2.41% to reach $40.93 per barrel. It is worth noting that Oil dropped while gold edged higher after President Donald Trump said that he tested positive for Covid-19 and with just one month left until the U.S. presidential election.