Gold prices further increased this week to reach $2,382.52/ ounce

17/05/202410/05/2024%ChangeYTD
Euro / LP97,044.8596,427.300.64%486.23%
Euro / Dollar1.08431.07740.64%-1.75%
NEER Index227.10227.39-0.13%-5.72%

 

Lebanese Forex Market

Lebanese authorities announced the decision of unifying the LBP exchange rate against USD at 89,500 starting Feb 16th, 2024. This rate represents the BDL’s electronic platform rate that is used for calculating commercial banks and BDL’s balance sheet, though no decision has been reached on the “banking exchange rate” yet.

The Lebanese exchange rate has maintained a relatively stable exchange rate of approximately 89,700 USD/LBP in the parallel market by May 10th, 2024. It is crucial to recognize that this stability is not backed by robust fundamentals, but by the cautious and tight monetary policies by BDL. Given the ongoing financial crisis and the absence of a recovery plan, Lebanon’s future remains uncertain and unstable.

As for the Euro/LBP currency pair, the Euro appreciated against the dollar-pegged LBP with the currency pair going from last week €/LBP 96,427.3 to €/LBP 97,044.85 by May 17th, 2024. The Nominal Effective Exchange Rate (NEER) of the Lebanese pound slightly dropped by 0.13% standing at 227.1 points on May 17th, 2024.

International Forex Market

The USD Index (DXY) fell by 0.54% to stand at 104.73 on May 17th, 2024. Several Federal Reserve officials reported that the central bank should keep borrowing costs high for longer as policymakers await more evidence that inflation is easing. As such, Fed officials are in no rush to cut interest rates.

The Euro slightly appreciated against the dollar by 0.71% over the course of the week and reached EUR/USD 1.085 by May 17, 2024. European Central Bank Executive Board member Isabel Schnabel warned against interest-rate cuts in June and July because there is a risk of easing prematurely. As euro-zone inflation nears the 2% target, ECB officials have agreed over an initial reduction in the deposit rate next month but have been wary of discussing what will happen beyond that period. Schnabel’s remarks are the clearest signal that policymakers are still concerned by rapid wage growth and geopolitical threats will take a breather at their following meeting.

Similarly, the British Pound appreciated against the dollar by 0.97% over the course of the week and reached GBP/USD 1.2654 by May 17th, 2024.

Furthermore, the Japanese Yen slightly depreciated by 0.09% to reach USD/JPY 155.84 by May 17th, 2024. In recent months, The yen’s fall down in value since 2022 has stemmed mainly from the gap between domestic and foreign interest rates, along with a growing trade deficit. Nonetheless, the rate differential has stopped widening for now, and the trade deficit is shrinking.

For other currencies in Europe, the Swiss Franc depreciated by 0.24% by the end of this week to stand at USD/CHF 0.9092 on Friday May 17th, 2024. Elsewhere, the Chinese Yuan slightly depreciated by 0.03% to stand at USD/CNY 7.2266; meanwhile the Australian and Canadian dollars appreciated over the course of the week to stand respectively at AUD/USD 0.6652 and USD / CAD 1.3639 on Friday May 17th, 2024.

Commodities

Gold prices increased by 0.66% over the course of the week to reach $2,382.52/ ounce on Friday May 17th, 2024. The precious metal is headed for a second consecutive weekly advance as markets upped their bets on rate cuts in recent weeks. Swaps traders now see a 51% chance the Fed will pivot by September, compared with 30% by end of April.

Crude oil prices fell by 0.95% over the course of the week and reached $79.17 on May 17th, 2024. Indeed, Saudi supply-to-market appears to have increased this year even as the kingdom holds production steady in accordance with OPEC+ pledges

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