| 13/10/2023 | 13/10/2023 | %Change | YTD | |
| Euro / LP | 15,858.00 | 15,805.50 | 0.33% | 887.90% |
| Euro / Dollar | 1.0572 | 1.0537 | 0.33% | -0.72% |
| NEER Index | 239.57 | 239.45 | 0.05% | 40.48% |
Lebanese Forex Market
The Lebanese Pound (LBP) remained steady within the new official rate of USD/LBP 15,000 by October 20, 2023.
While gold, oil and worldwide currency prices were extremely volatile since the start of the war in Gaza, the Lebanese exchange rate remained surprisingly steady in the parallel market at the range of 89,700 LBP/USD. Lebanon is again in the middle of a storm that could completely lead to a total collapse of the Lebanese economy. Lebanon’s situation could completely collapse and all economic indicators rapidly worsen amid the security crisis in the region and spillover of the war with potential destruction of its remaining infrastructure. As such, it is important to note that geopolitical situations can change, and staying completely out of regional conflicts can be challenging. Lebanon should maintain a neutral stance and work towards reducing the chances of being drawn into the conflict. More importantly, Lebanon should continuously adapt its strategies to safeguard its interests and stability in a turbulent region.
As for the Euro/LBP currency pair, the Euro appreciated against the dollar-pegged LBP with the currency pair going up from last week €/LBP 15,805.50 to €/LBP 15,858.00 by October 20, 2023. The Nominal Effective Exchange Rate (NEER) of the Lebanese pound slightly increased by 0.05% standing at 239.57 points on October 20, 2023.
International Forex Market
On Friday October 20, 2023, the USD Index (DXY), which monitors the performance of the US dollar against a basket of its primary counterparts, appears to be showing modest downward movement around the 106.30 range. The index is currently registering slight losses as we conclude the week, with market participants still processing Chair Powell’s cautious remarks from Thursday, where he suggested that a November interest rate increase is not a preferred option.
In turn, the Euro currency traded slightly on the defensive against the US dollar prompting EUR/USD to recede from weekly peaks but remained higher than previous week standing at 1.0575 on Friday October 20, 2023. Meanwhile, financial markets are considering the possibility of the European Central Bank (ECB) discontinuing its policy measures. This is happening despite inflation levels exceeding the bank’s target and increasing worries about the risk of an economic slowdown or stagflation in the European zone.
As for the UK, the British pound registered a loss of 0.59% compared to previous week standing at 1.2115 GBP/USD On October 20, 2023. Consumer confidence in the UK experienced its sharpest decline since the onset of the COVID-19 pandemic, as financially constrained households grappled with the consequences of enduring inflation and elevated interest rates. The United Kingdom is currently grappling with the most severe inflationary pressures among the Group of Seven nations, leading the Bank of England to raise its benchmark lending rate to the highest point it has reached since 2008.
For other currencies in Europe, the USD/CHF edged lower by 1.57% by the end of this week to stand at USD/CHF 0.8927 as the escalating geopolitical tension in the Middle East might benefit the safe haven currency especially the Swiss Franc. Moreover, this week, the Swiss trade surplus widened more than expected in September and came in at 6.31B compared to 3.81B in the previous month.
Meanwhile, the USD/JPY pair is cautiously pushing toward 150 with markets are concerned of potential intervention from the BoJ which may drive the Yen rapidly lower while the bank will hold its monetary policy meeting on October 31 and the market is speculating on further tightening. Same for the Chinese currency, USD/CNY pair slightly added 0.13% to reach 7.3177 by Friday October 20, 2023
Elsewhere, the Australian depreciated by 0.14% from the previous week to stand at 0.6312 AUD/USD on Friday October 20, 2023. Meanwhile, the USD/CAD pair remained somehow stable with a slight increase of 0.35% to stand at USD/CAD 1.3720, by Friday October 20, 2023 driven by huge rebound in oil prices, as the country is the leading oil exporter to the United States.
Commodities
Gold prolonged its gains throughout the week in light of increased risk aversion from investors. The rise of the risk-off environment comes courtesy of the war and tensions in the Middle East region. The impact and fallout spurred renewed concern of a wider conflict that helped yellow metal accelerate toward the $1,978.28/ounce by the end of this week.
Oil prices advanced by 7.20% on a weekly basis and reach high of $93.40/barrel as geopolitical tensions intensified in the Middle East and prices poised for a second straight weekly gain as the tensions between Israel and Hamas caused concerns about potential global supply disruption.