Dollar Demand in the Lebanese Forex Market Weakened During the Week

Demand for the dollar in the Lebanese Forex market weakened during the week as the Lebanese pound’s peg against the dollar went from $/LP 1,507-1,511 with a mid-price of $/LP 1,509 on the 12th of June to $/LP 1,506-1,510 with a mid-price of $/LP 1,508. Foreign assets (excluding gold) at the Central Bank increased by a monthly 2.28%, from $37.73B by end-April to $38.59B by end-May. Meanwhile, the dollarization rate of private sector deposits stood at 65.30% in April 2015 compared to 65.71% in December 2014.

The Euro appreciated against the dollar this week, going from €/$1.1163 last week, to €/$1.1311. This came as a result of the Federal Reserve’s signal that it will increase interest rates gradually, after seeing more decisive evidence of economic growth in the United States.

Demand for gold headed for its second weekly increase after efforts to secure a Greek bailout weakened and the Federal Reserve’s signal. Therefore, the price of gold went up from $1,180.34/ounce to $1,199.85/ounce, this week.

By Friday 19th of June, 2015, 12:30 pm Beirut time, the dollar-pegged LP depreciated against the euro going from €/LP 1,682.82 on the 12th of June to €/LP 1,705.13. The Nominal effective exchange Rate (NEER) dropped 0.16% to 163.76 points, narrowing its year-to-date gains to 11.16%.

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