Euro Improved Against the Dollar Recording a 9-Week High

Demand for the dollar remained stable on the Lebanese Forex market during the week, as shown by the Lebanese pound’s peg against the dollar which maintained a quote of $/LP 1,510-1,514 with a mid-price of $/LP 1,512. Foreign assets (excluding gold) at the Central Bank decreased by a monthly 1.06% from $38.89B by end-February to $38.48B by end-March. Meanwhile, the dollarization rate of private sector deposits stood at 65.51% in January 2015 compared to 65.71% in December 2014.

The Euro strengthened by 2.84% against the dollar to €/$1.1193. This came as a result of the statement by the US Federal Reserve that there is no rush in increasing interest rates during a period of slowing growth that has come out at a sluggish rate of 0.2% in Q1 2015 compared to Q4 2014. Moreover, the Eurozone ended its four-month deflation after the European Central Bank started its quantitative-easing program.

Demand for the safe haven went up as the dollar lost some of its luster. The weak economic indicators in the US, such as jobless claims reaching a 15-year low, raised the price of gold from $1,191.20/ounce on the 24th of April 2015 to $1,206.06/ounce this week.

By Thursday April 30th, 2015, 12:30 pm Beirut time, the dollar-pegged LP depreciated against the euro going from €/LP 1,640.76 on the 24th of April to €/LP 1,687.34. The Nominal effective exchange Rate (NEER) gained 0.19% to 164.45 points bringing its year-to-date gain to 11.63%.

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