|Euro / LP||16,393.50||1,637.38||901.20%||921.26%|
|Euro / Dollar||1.0929||1.0862||0.62%||2.64%|
Lebanese Forex Market
According to the Minister of Finance’s decision in late October 2022, The Central Bank of Lebanon has officially modified Lebanon’s official exchange rate against the dollar on 1st February 2023, from 1507.5 LBP/USD to 15,000 LBP/USD, which has been pegged to the dollars for more than 25 years. This action came in light with claims of unifying the exchange rate, a condition set by the IMF. However, this rate is yet extremely far from the market rate and would lead to further confusion and disruption in markets, as it did not meet any reform objectives.
Meanwhile on the parallel market, the Lebanese national currency continued a steady decline against the dollar that has reached an all-time low of 64,500 LBP/USD on Wednesday 1st, February 2023. The Lebanese currency crumbled below the levels of last week levels and registered a 10.02% drop from last week average of 54,393 LBP/USD to 59,831 LBP/USD during the period between 28 January and 3 February 2023 with a minimum of 55,500 LBP/USD by the end of the week February 03, 2023.
Following the historical devaluation of the Lebanese official rate, the Euro/LBP currency pair remarkably appreciated against the dollar-pegged LBP with the currency pair going from last week €/LBP 1,637.38 by January 27, 2023 to €/LBP 16,393.50 by February 03, 2023. Moreover, the Nominal Effective Exchange Rate (NEER) of the Lebanese pound slightly dropped by 32.49% weekly to stand at 115.47 points on February 03, 2022.
International Forex Market
This week, the US dollar was struggling to surpass the lowest levels near 100.80 recorded on Thursday but made a sharp U-turn just after markets absorbed the Fed rate hike positively and shifted attention back to the green currency. However, the index marginally steadied compared to last week and recorded a downtick of 0.23% to stand at 101.66 by Friday February 03, 2023.
The EUR/USD pair has been moving higher over the course of the week and tried to build a cushion just below the 1.0900 levels. However, the Fed interest rate hike decision added volatility among the forex market but the European currency maintained a positive territory compared to last week and stood at $1.0929 on Friday, 0.62% higher than the previous week.
Meanwhile, the GBP/USD has been losing ground in the early part of this week but recovered a little though remained 1.03% lower at $1.2239 compared to last week $1.2366. The momentum was a result of Bank of England policy recall as it stated that inflation will continue to fall this year and more rapidly during the second half of 2023. This in turn, raises market expectations for a less aggressive policy tightening going forward and undermined the British Pound.
Concerning the Japanese currency, the Yen extended losses this week and traded 1.12% lower than last week previous levels as it stood at 128.50 USD/JPY by Friday February 03. Back to China, the dollar gapped slightly higher against the Chinese ending the pair 0.66% lower compared to last week at 6.7395 USD/CNY. As for the Australian dollars, it depreciated by 0.72% on a weekly basis and stood at 0.7055 USD/AUD by Friday 03, 2023 while the Canadian dollars edged 0.23% higher and stood at 1.3352 USD/CAD by the end of week 03, 2023.
Gold prices fell yesterday after the US dollar rebounded post Fed and ECB decisions as well as stronger than expected initial jobless claims data. The gold is becoming increasingly less important for investors and traders as inflation continues to soften and leaves a room for potential shift in gold trend. In more details, gold prices slightly dropped but remained relatively high at $1,930.07/ounce by end of February 03, 2023.
Crude oil’ prices inched 7.51% lower by the end of the week and traded at $82.20 on Friday 03, 2023 compared to the previous week of January 27. The upturns in prices this week are a result of US Energy Information Administration report about crude oil inventory build up of 4.1 million barrels for the week to January 27. This is compared with a modest inventory increase of half a million barrels for the previous week, which in turn followed two weeks of substantial inventory builds.