Critical Days Are Facing Lebanon in the Event of Lifting Subsidies

Euro / LP1,813.961,809.550.24%-1.36%
Euro / Dollar1.20331.20040.24%-1.36%
NEER Index125.30139.87*-1.59%0.37%

* As for 23 April 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 May 07, 2021.

Lebanon is facing critical days in all aspects. Politically speaking, the awaited government is still far from seeing the light as more obstacles are heading up due to national and foreign conflicts between the influencer countries. In the economic aspect, the situation is getting worse, as the BDL could stop soon subsidizing most of the essential goods including the gaz. Given all there possible, we expect that the Lebanese lira will face more depreciation as until now we still can’t see the light at the end of this long tunnel.

In turn, the dollarization ratio for private sector deposits decreased from 80.37% in December 2020 to 80.04% in February 2021.

As for Euro/LBP currency pair, the Euro appreciated against the dollar-pegged LBP with the currency pair going from last week’s €/LBP 1,809.55 to €/LBP 1,813.96 by May 07, 2021. Moreover, the Nominal Effective Exchange Rate (NEER) of the LBP decreased by 1.59% since 23 April 2021 to stand at 125.30 points on 7 May 2021

International Forex Market

The Euro/USD recorded an uptick from last week’s €/USD 1.2004 to €/USD 1.2033 by May 07, 2021. The dollar is under pressure amid some recent reports that claimed that U.S unemployment rate is decreasing. Those reports are signaling a strong economic recovery which is increasing risk appetite of investors to head to more riskier asset other than dollar, in addition to higher expected inflation in the US.


Gold price increased at the end of this week and witnessed an uptick by 2.92% to reach $1,820.3/ounce. In fact, the optimistic vision of some investors for an early rebound of the economy has built some fears to other investors of an uncontrollable inflation; Inflation may surge to high level with this strong economic rebound. That what’s explaining the increase of price of gold this week as this asset is usually used to hedge against inflation.

In addition, Crude oil prices increased this week by 1.04% to reach $67.95/Barrel. The price of oil could increase and hit $70/barrel in the upcoming weeks amid positive economic outlook worldwide.

Leave a Reply

Your email address will not be published. Required fields are marked *