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 April 09, 2021.
In turn, the dollarization ratio for private sector deposits decreased from 80.37% in December 2020 to 80.20% in January 2021.
The Lebanese Lira continues its devaluation against the dollar in the parallel market and reached USD/LBP12700 this week. The Lebanese lira is expected to depreciate more in the upcoming weeks amid the political conflicts and the failing to form the awaited government. Several factors are responsible for the deterioration of Lebanese lira: the low confidence in the national currency due to high uncertainty and instability of the political and economic situation; The dollar has become the safe haven for most of Lebanese, which is considered as a rational step in order to protect their purchasing power. Also, we have to mention the psychological effect, as most of the Lebanese fear that their purchasing power will collapse more amid the decrease in the value of Lebanese lira which will push them to buy more dollars and sell LBP.
As for Euro/LBP currency pair, the Euro appreciated against the dollar-pegged LBP with the currency pair going from last week’s €/LBP 1,792.42 to €/LBP 1,792.87 by April 09, 2021.
International Forex Market
The Euro/USD recorded an uptick from last week’s €/USD 1.1890 to €/USD 1.1893 by April 09, 2021. Both the Euro and GB sterling hit two-year high against the dollar at the end of this week. In fact, the shifting appetites of investors are heading to more risky assets amid the vaccination rollout. Some analysts believe that there is a negative correlation between equities and dollar. The global financial recovery is playing its role in the market, which boosts the global equity market and weaken the dollar.
Commodities
Gold price increased at the end of this week and witnessed an uptick by 1% to reach $1,754.8/ounce. In details, the price of gold increased amid weaker US yields and dollar.
In addition, Crude oil prices decreased this week by 2.02% to reach $63.18/Barrel. After hitting 70$ per barrel in early March, the price of crude oil retreated amid new travel restrictions to combat the new strain of Covid-19. We don’t expect that the price of crude oil goes back to pre-crisis level in the upcoming weeks, as the recovery in supply must have a similar recovery in demand.