| 09/10/2020 | 02/10/2020 | %Change | YTD | |
| Euro / LP | 1,776.79 | 1,763.17 | 0.77% | – |
| Euro / Dollar | 1.1786 | 1.1696 | 0.77% | – |
| NEER Index | 128.32 | 128.68 | -0.28% | 9.30% |
Lebanese Forex Market
To-date, the Lebanese Pound (LP) remained steady within the official range of US $/LP 1,514 to 1,514.5, with a mid-price of $/LP1,514.25 by the week of October 9th 2020.
Challenges remain within the Lebanese forex market; depositors with dollar accounts in Lebanon are paid in cash in the local currency under Circular 151; and the worsening of the covid-19 pandemic adding pressure on the economy.
The peg to the US Dollar at the official rate continues to be supported by the Central Bank’s total foreign assets totaling $25.93B in 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”.
In turn, the dollarization ratio for private sector deposits increased from 76.02% in December 2019 to 80.18% in August 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 1,763.17 to €/LBP 1,776.79 by October 9, 2020.
Moreover, the Nominal Effective Exchange Rate (NEER) of the LBP recorded a weekly downtick of 0.28% to stand at 128.32 points over the same period.
International Forex Market
The Euro/USD went up from last week’s €/USD 1.1696 to a 2-week high €/USD 1.1786 by October 9, 2020.
Although the Euro (EUR) struck higher on Tuesday, the pair then fell near the close as people reached to the USD safe-haven after US president Donald trump announced coronavirus relief packages. In details, the white House’s new approach to support stocks and President Donald Trump’s negotiations on fiscal stimulus weigh more on the US Dollar.
Moreover, the minutes from the European Central Bank (ECB) meeting held in September were released on Thursday. The European Central Bank (ECB) minutes significantly mentioned that EUR appreciation was linked to the ‘market perceptions of the scope for further changes in monetary policy in different EU jurisdictions’.
Commodities
Gold prices slipped this week by 0.63% to reach $1893.09/ounce amid the deteriorating economic activity and covid-19 pandemic. In turn, the price of gold may struggle to extend the series of higher highs and lows from the previous week as the Federal Reserve relies on its current tools to support the US economy, and the FOMC Minutes may reveal more of the same for the next interest rate decision on November 5.
Crude oil prices moved upwards this week by 5.89% to reach $43.03 per barrel. It is worth noting, however, that the decrease in transportation fuel demand has led to an increase in petroleum product stocks across all major petroleum product trading centers since the end of the first quarter of 2020.