Dr Azar is Professor, Faculty of Business Administration and Economics, Haigazian University
My previous note on the exchange value of the US dollar against the Lebanese pound has sparked many interesting reactions. One of them was a concern about whether I am capable to forecast ex ante the exchange value of the US dollar for the future. This note addresses this issue. As is standard in economic theory, the price of the US dollar depends on supply and demand. In my previous note I explained the depreciation of the pound as the result of the oversupply of the Lebanese currency and its deficient demand. Supply is the actual level of currency in circulation, whereas demand is determined by two variables: the coincident indicator of the central bank, which measures real shocks, and the amount of checks cleared, which is a measure of nominal shocks.
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The Future Price of US Dollar Against the Lebanese Pound under 3 Scenarios