Demand for the dollar, in the Lebanese’s FOREX market, weakened over the week, as reflected by the Lebanese pound’s peg against the dollar that decreased from $/LP 1,510-1,514 with a mid-price of $/LP 1,512 to $/LP 1,509-1,513 with a mid-price of $/LP 1,511 this week. Foreign assets (excluding gold) at the Central Bank rose by a monthly 2.71% to $38.89B by end-February. Meanwhile, the dollarization rate of private sector deposits stood at 65.51% in January 2015 compared to 65.71% in December 2014.
The dollar weakened for the second week running due to investor hesitance after the Federal Reserve’s announced that it is in no rush to raise interest rates. This translated into an appreciation of the Euro against the dollar from last week’s quote of €/$1.0674 to €/$1.0821.
Gold maintained its upward trend, as it is often used for hedging against depreciation in the dollar currency. In addition to that, the weekly 4.6% increase in oil prices amid the ongoing conflicts in the Middle East, further accelerated the demand for gold. As a result, the price of gold increased from $1,172.05/ounce last week to $1,198.85/ounce as of 12:30 pm Beirut time on Friday.
By Friday March 27th, 2015, 12:30 pm Beirut time, the dollar-pegged LP depreciated against the Euro, going from €/LP 1,609.11 the prior week, to €/LP 1,631.27. The Nominal effective exchange Rate (NEER) lost 0.55% over the week to 163.42 points, with its year-to-date gain reaching 10.93%.