Dollar Strengthened as Gold Weakened to $1,222.20/Ounce on Thursday

Demand for the dollar strengthened over the week, as reflected by the Lebanese pound’s peg against the dollar that went from $/LP 1,508-1,512 with a mid-price of $/LP 1,510 to $/LP 1,509-1,513 with a mid-price of $/LP 1,511 this week. Foreign assets (excluding gold) at the Central Bank remained almost constant, decreasing by a monthly 0.01% to $37.86B by end-January. Meanwhile, the dollarization rate of private sector deposits stood at 65.68% in November 2014 compared to 66.13% in December 2013.

The euro depreciated as an agreement for a bailout plan for Greece’s failing economy became more likely, which would probably entail the EU buying more Greek bonds. This caused the euro to weaken against the dollar by 0.22%, ending the week at €/$ 1.1430.

Demand for gold relaxed over the week as the dollar strengthened and evidence of continued oversupply of the oil market surfaced. The price of gold dropped from $1,264.40/ounce on Thursday 5th of February 2015 to $1,222.20/ounce this week.

By Friday February 13th, 2015, 12:30 pm Beirut time, the dollar-pegged LP appreciated against the euro, going from €/LP 1,726.84the prior week, to €/LP 1,723.07. The Nominal effective exchange Rate (NEER) gained 0.80% over the week to 158.27 points, with its year-to-date gain reaching 7.43%.

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