Signs of Recovery in Europe Boost the Euro

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 1.94%, from $38.48B by end-March to $37.73B by end-April. Meanwhile, the dollarization rate of private sector deposits stood at 65.51% in January 2015 compared to 65.71% in December 2014.

The Euro improved by 0.36% against the dollar to €/$1.1233. The Euro’s progress that started since mid-April was mostly due to the signs of recovery that Europe has been showing amid concerns of slowing growth in the U.S.

Demand for gold was subdued after the Fed policy makers signaled that U.S. expansion will be more robust than expected. The Fed’s optimistic view on the economy drove the price of gold down to $1,185.98/ounce from $1,191.20/ounce on the 30th of April 2015.

By Friday May 8th, 2015, 12:30 pm Beirut time, the dollar-pegged LP depreciated against the euro going from €/LP 1,687.34 on the 30th of April to €/LP 1,693.37. The Nominal effective exchange Rate (NEER) lost 0.46% to 163.69 points; however its year-to-date change remained positive at 11.11%.

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