US Dollars Appreciated against the Euro Amid Unapproved US Stimulus Plan


Euro / LBP1,826.561,831.74-0.28%
Euro / Dollar1.21331.2167-0.28%
NEER Index125.15125.55*-0.32%0.25%
*Value of 13 January 2021

Lebanese Forex Market

To-date, the Lebanese Pound (LBP) remained steady within the official range of USD/LBP 1,514 to 1,514.5, with a mid- price of USD/LBP 1,514.25 in the week of January 29,2021.

The peg to the US Dollar at the official rate continues to be supported by the Central Bank’s total foreign assets totaling $23.7B in mid-Jan 2021. However, BDL intervenes by namely allowing small depositors to withdraw their dollar savings in LBP 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 80.5% in October 2020.

The Lebanese Lira continues to depreciate against the dollar and touched nearly 9000LBP/USD in the parallel market at the end of January 2021.  The loss of the value of Lebanese Lira is likely to get worse amid the political deadlock with the failure in forming failing an urgent government, and the lockdown imposed by the government till the 8th of February without any financial aid to the Lebanese citizens. The Lebanese politicians should be aware that the poverty rate in Lebanon has reached an unprecedented level, and forming a new government is a must in order to stop the collapse.

As for Euro/LBP currency pair, the Euro depreciated against the dollar-pegged LBP with the currency pair going from last week’s €/LBP 1,831.74 to €/LBP 1,826.56 by the end of January 2021. Moreover, the Nominal Effective Exchange Rate (NEER) of the LBP recorded a weekly downtick of 0.32% since 13 January 2021 to stand at 125.15 points on 29 January 2021.

International Forex Market

The Euro/USD recorded a decrease from last week’s €/USD 1.2167 to €/USD 1.2133 by January 29, 2021. In fact, the US fiscal spending package that was supposed to be around $1.9 trillion is not yet approved by the congress. This eased the fears of a higher inflation rate, boosting the value of US dollars. Further, the US dollar index (DXY: measure of the value of USD against a basket of currencies) has increased from last week’s from 90.29 to 90.45 by the end of January 2021.  On the other hand, the Eurozone is still suffering due to the surge of in COVID-19 cases, while the recovery from the pandemic is still far away amid the slow vaccination rollout.


Gold price recorded an uptick this week by 0.67% to stand at $1,865.12/ounce. In fact, gold is always considered the safe haven of investors. While the economic recovery is still uncertain, and the policy of the US fed to keep interest rates low, (which can likely lead to a higher inflation rate) our expectation that the gold price will likely continues to increase in the upcoming months. It’s worth mentioning that the sliver witnessed it best performance in 2020, and we expect a further increase in 2021, as this precious metal is a source of renewable energy, policy that is adopted by the US president Joe Biden.

Meanwhile, Crude oil price rose this week by 1.05% to reach $55.99/Barrel. Indeed, oil edged higher this week with the cut in Saudi Arabia’s oil supply. In fact, the fuel demand has not recovered yet due to stalled vaccine rollout and the new corona virus strains. However, our outlook of the oil price is positive, and we expect the price to increase to reach around $70/barrel in summer 2021, while the world recovers from the global pandemic

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