ECB raises interest rates again, contrary to Bank of Japan

Euro / LP1,497.871,471.331.80%-12.34%
Euro / Dollar0.99360.97601.80%-12.33%
NEER Index173.65173.490.09%15.87%

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 October 28, 2022.

Meanwhile, on the parallel market this week, the Lebanese national currency has fluctuated around LBP/USD 37,557 with a minimum of LBP/USD 34,800 and ended the week at LBP/USD 36,900. Indeed, this week, the Lebanese pound experienced a sudden appreciation against the dollar, after the announcement of Riad Selemeh. In fact, in a statement on October 23, the Central Bank governor stated that BDL will stop buying dollars at the market rate from money transfer companies, but will continue selling at Sayrafa rate, which currently stands at LBP 30,100.

As for the Euro/LBP currency pair, the Euro appreciated against the dollar-pegged LBP with the currency pair going from last week €/LBP 1471.33 by October 21, 2022 to €/LBP 1,497.87 by October 28, 2022. Moreover, the Nominal Effective Exchange Rate (NEER) of the Lebanese pound increased marginally by 0.09% weekly to stand at 173.65 points on October 28, 2022.

International Forex Market

The US dollar declined against its major competitors early Friday; in more details, the dollar index fell against the six major currencies, and traded 2.19% lower at $110.88 down from last week $113.36.

The Euro rose against the dollar by the end of the week, closed at $0.9936. On Thursday, October 27th, The European Central Bank (ECB) raised interest rates by another 0.75 basis points, to 1.5%, the highest rate since 2009, in an effort to slow the economy and fight the inflation that hit 9.9%. Nevertheless, a big part of the problem is linked to rising energy prices, which was triggered by Russian President Vladimir Putin’s decision to limit natural gas supplies to European countries.

Meanwhile, the GBP/USD price rose strongly this week and stood at 1.1514 on October 21, 2022, despite prime ministers rotating in and out of the government.  The UK economy has been shocked and rising inflation rates have fueled the UK cost of living crisis and fear of an oncoming recession.

As for the Swiss Franc, it appreciated to 0.9946 on Friday, versus 1.0108 Swiss/ Dollar the previous week. Nevertheless, the country is ultimately facing challenges same as the European zone related to direct and indirect consequences of geopolitical developments such as inflation, raw material and energy prices, blocking the supply chain and energy supply.

Beyond Europe, the Japanese currency highly appreciated by 2.54% this week, reaching JPY/US 147.63. Japan’s inflation rate reached 3% in September, however, the Bank of Japan (BOJ) decided to maintain low interest rates, among a global wave of central banks tightening monetary policy.

This week, the Chinese and Australian currencies depreciated respectively against the dollar by 0.14% and 2.59% reaching CNY/USD 7.2568 and AUD/ USD 0.6414. On the other hand, the Canadian currency appreciated against the dollar by 1.41% reaching CAD/USD 1.3611.


Gold prices rose by 1.38% on a weekly basis to $1,649.3/ounce, versus 1626.8/ ounce in the previous week. In fact, the gold’s price rise is consistent with a weaker US dollar.

Crude oil prices increased significantly by 4.06% this week to $88.09/barrel compared to $84.65/ barrel in the previous week. In fact, crude oil traded higher on Friday following the weakening of the dollar. Furthermore, according to the US Bureau of Economic Analysis (BEA), the real GDP of the United States increased at an annual rate of 2.6% during the third quarter of 2022, mainly driven by an increase in exports, perhaps explaining the higher price for crude oil.

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