| 12/02/2021 | 05/02/2021 | %Change | YTD | |
| Euro / LP | 1,821.81 | 1,803.53 | 1.01% | – |
| Euro / Dollar | 1.2085 | 1.1964 | 1.01% | – |
| NEER Index | 124.58 | 125.30 | -0.57% | -0.21% |
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 February 12, 2021.
The peg to the US Dollar at the official rate continues to be supported by the Central Bank’s total foreign assets totaling $23.47B in January 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 2020 to 80.3% in November 2020.
The Lebanese Lira continues to depreciate against the dollar and remains nearly around 8,800LBP/USD in the parallel market at the end of week of February 12, 2021. In fact, the pressure on Lebanese pound has increased amid strained ties of the government deadlock. Moreover, in efforts to restore better international relations, Prime Minister-designate Saad Hariri visited Paris this week after visiting the UAE, Egypt and Turkey. However, if no advancement was made in the cabinet formation, then unlocking international assistance wouldn’t stand a chance.
Furthermore, Lebanon is set in shortage to finance the subsidized goods, left with a total of around $800 million aside from banks’ required reserves which will almost last for the upcoming two months. It is worth mentioning that previously, BDL used to allocate $500 million per month in order to subsidize over 200 items.
As for Euro/LBP currency pair, the Euro appreciated against the dollar-pegged LBP with the currency pair going from last week’s €/LBP 1,803.53 to €/LBP 1,821.81 by the 12th of February 2021. Moreover, the Nominal Effective Exchange Rate (NEER) of the LBP recorded a weekly downtick of 0.57% since 05 February 2021 to stand at 124.58 points on 12 February 2021.
International Forex Market
The Euro/USD recorded an increase from last week’s €/USD 1.1964 to €/USD 1.2085 by February 12, 2021. The US dollar depreciation followed not so optimistic US economic data and the control of the coronavirus (COVID-19) pandemic also identified potential gaps in health systems capacities.
Moreover, the dollar’s hindrance in the second week of February was attributed to fewer jobs being created in the US, were unemployment cases remained at 779,000. However, observing the increasing vaccinations intake that will reach numerous individuals in the coming months along with the government’s stimulus, we can conclude that the US economy and the job market will strengthen at a faster pace than they did after previous recessions.
Commodities
Gold price has witnessed an uptick this week of 0.33% to stand at $1,817.6/ounce. As US President Joe Biden’s fiscal stimulus plan of $1.9 trillion is rapidly enforced, prices of precious metals started moving higher against the low interest rates environment. Moreover, the increase in the US 10-year treasury note yield has also affected inflows in the gold market.
Meanwhile, Crude oil price rose this week by 2.21% to reach $60.65/Barrel. A weaker dollar this week generated stronger demand for crude oil. In fact, prices hit a record high above $58/Barrel in New York since January 2020 amid supply declines in the US, which led to a shrinking of its inventories globally.