Gold Recorded Gains this Week Reaching $2,463 / ounce

Lebanese Forex Market

Lebanese monetary authorities announced the decision of unifying the LBP exchange rate against USD at 89,500 starting Feb 16^th, 2024. This rate represents the BDL’s electronic platform rate used for calculating commercial banks’ and BDL’s balance sheets, though no decision have 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 August 2^nd, 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, and as BDL deactivated circular 161 related to Sayrafa since August 2023 when the acting governor Mr. Wassim Mansouri took the reign of BDL.

As for the Euro/LBP currency pair, the Euro depreciated against the LBP with the currency pair going from last week €/LBP 97,161.2 to €/LBP 96,740.55 by August 2^nd, 2024. The Nominal Effective Exchange Rate (NEER) of the Lebanese pound slightly rose by 0.06% standing at 228.52 points on August 2^nd, 2024.

International Forex Market

The USD Index (DXY) slightly declined by 0.1% to reach 104.22 on August 2^nd, 2024 as weak US economic data stoked fears of a downturn. Thursday data revealed contraction of US manufacturing activity.

The Euro depreciated against the dollar by 0.44% over the course of the week and reached EUR/USD 1.081 by August 2^nd, 2024 as traders are expecting two interest rate cuts by European Central Bank (ECB) this year starting September, although President Lagarde stated that September decision is still “wide open”.

Similarly, the British Pound slightly depreciated against the dollar by 1.17% over the course of the week and reached GBP/USD 1.2721 by August 2^nd, 2024, driven by two main factors. First, Bank of England (BoE) reduced interest rates by 25 bps to 5%. Second, investors are waiting the speech of the new British Finance Minister Rachel Reeves in which she will probably announce plans to cut public spending, raise taxes and delay some infrastructure projects.

For other currencies in Europe, the Swiss Franc appreciated by 1.36% by the end of this week to stand at USD/CHF 0.8716 on Friday August 2^nd, 2024. Elsewhere, the Japanese Yen appreciated by 3.06% to reach USD/JPY 149.02 as US dollar declined over the course of the week. Similarly, the Chinese Yuan slightly appreciated by 0.53% to reach USD/CNY 7.2115 by August 2^nd, 2024.

Furthermore, the Australian and Canadian dollar depreciated respectively over the course of the week by 0.55% and 0.3% to stand at AUD/USD 0.6512 and USD/CAD 1.3874 on Friday August 2^nd, 2024.

Commodities

Gold prices rose by 3.19% over the course of the week to reach $ 2,463.33 / ounce on Friday August 2^nd, 2024. Gold prices witnessed increases this week after the weaker economic data and the expectation of rate cuts by the Federal Reserve in September. Moreover, the escalating security events in the Middle East after the assassination of Hamas Leader Ismail Haniyeh in addition to Hezbollah’s top commander in Beirut suburbs encouraged investors to purchase gold which is considered a safe-heaven.

Crude oil prices fluctuated over the course of the week due to several factors and ended the week with a slight decrease of 0.23%. At the beginning of the week, crude oil prices decrease due to data revealed showing China’s decline in oil imports by 11% in the first half of 2024 and reached $74.73 / barrel. Then, the escalating security issues in the Middle East led to an increase in oil prices where it reached $ 76.98 / barrel on Friday August 2^nd, 2024.

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