Lebanese Purchasing Power Continues to Shrink with Further devaluation of the National currency

Euro / LP1,830.181,830.42-0.01%-0.47%
Euro / Dollar1.21401.2142-0.01%-0.47%
NEER Index139.41138.990.30%11.67%


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 28, 2021.

The national currency continues its unprecedented devaluation and witnessed the worst performance during this week to USD/LBP 13000. The depreciation of Lebanese lira is adding more misery to the Lebanese citizens, as with every devaluation their purchasing power decreases dramatically. The solution is not impossible and we still have some hope that our policymakers will wake up and put their personal interests on the side in order to form the awaited government and proceed the negotiations with the IMF. Doing so, will likely ease the pressure on the national currency.

In turn, the dollarization ratio for private sector deposits decreased from 80.37% in December 2020 to 80.24% in March 2021.

As for Euro/LBP currency pair, the Euro depreciated against the dollar-pegged LBP with the currency pair going from last week’s €/LBP 1,830.42 to €/LBP 1,830.18 by May 28, 2021. Moreover, the Nominal Effective Exchange Rate (NEER) of the LBP increased by 0.30% since 21 May 2021 to stand at 139.41 points on 28 May 2021.

International Forex Market

The Euro/USD recorded a small downtick from last week’s €/USD 1.2142 to €/USD 1.2140 by May 28, 2021. The slightly stronger happened despite the combination of inflation fears and the economic rebound especially in the emerging markets. The explanation for the slightly stronger dollar is that growth expectations are viewed to be much favorable than inflation expectations.


Gold price increased at the end of this week and witnessed an uptick by 0.71% to reach $1,892.5/ounce. The global economic recovery continues to add more pressure on inflation level worldwide, as the gold is always used to hedge against inflation. However, we except that inflation remain controllable, and the gold price will be stable for the upcoming months without hitting any new high record.

In addition, Crude oil prices increased this week by 4.84% to reach $69.79/Barrel. The negotiations between Iran and global powers are being positive for now, and the expectations assumed that an agreement will be on the table soon. As such, this potential agreement will have positive impact on all political conflict regionally and especially in the Middle East, which will encourage all the big investment projects and stimulate more the economy which can surely increase the price of crude oil.

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