Economic Uncertainty Pushed the Greenback Higher

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 by August 19, 2022.

On the parallel market this week, the Lebanese national currency plunged to all time low and recorded 33,000 LBP/USD by the end of this week. The continuous depreciation of the national currency is a strong indicator that the economy is affected by the political uncertainty reflected in with the failure to form a new government, and the fate of presidential elections, in addition to economic uncertainty related to the IMF negotiations.

As for the Euro/LBP currency pair, the Euro depreciated slightly against the dollar-pegged LBP with the currency pair going from last week €/LBP 1,544.34 to €/LBP 1,513.08 by August 19, 2022. Moreover, the Nominal Effective Exchange Rate (NEER) of the Lebanese pound slightly decreased marginally by 0.78% weekly to stand at 168.61 points on August 19, 2022.

International Forex Market

The Euro/USD slightly depreciated against the dollar from last week from €/USD 1.0224 to €/USD 1.0037 by August 19, 2022.  The dollar index increased on Friday 0.5% to 108.01 and recorded its biggest weekly gain since April 2020, as investors are worried of a further economic slowdown after the confirmation of the Fed in it last meeting that it will continue to increase interest rates in order to fight inflation. Accordingly, the dollar is considered a safe haven for investors when there is an economic uncertainty.

Commodities

Gold prices slumped by 2.61% this week, to $1757.59/ounce. In fact, the negative correlation between the dollar and gold is taking place again amid a stronger dollar.

Crude oil prices dipped sharply this week by 3.48% and reached $94.73/barrel, amid global economic slowdown and the risk of global recession.