Euro Drops to 1.12 against the US Dollar

Demand for the dollar decreased over the week, as reflected by the Lebanese pound’s peg against the dollar that went from 1,512-1,513 with a mid-price of $/LP 1,512.5 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 continued to depreciate as Greece and Eurozone officials agreed on the Greek bailout terms. In addition, the Russian and Ukrainian’s tribulations remain a large deterrent for foreign investors in Europe as the Euro/dollar rate ended the week at €/$ 1.12.

Gold prices remained constant as investors were in a wait and see mode regarding the recent developments in the Eurozone, especially the Greek crisis, and the monetary policy in the US whereby interest rates rise have been postponed to the second half of the year. In saying that, gold price registered $1208.30/ounce this week compared to $1207.05/ounce on Thursday 19th of February.

By Friday February 27th, 2015, 12:30 pm Beirut time, the dollar-pegged LP appreciated against the Euro, going from €/LP 1,707.55 the prior week, to €/LP 1,691.72. The Nominal effective exchange Rate (NEER) gained 0.63% over the week to 159.26 points, with its year-to-date gain reaching 8.10%.

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