Demand for the Dollar Steady Over the Past Week

Demand for the dollar in the Lebanese Forex market steadied during the week as the Lebanese pound’s peg against the dollar stabilized at $/LP 1,503–1,507 with a mid-price of $/LP 1,505. Foreign assets (excluding gold) at the Central Bank grew by a monthly 0.7% to reach $38.86B at the end of June. As for the dollarization rate of private sector deposits, it slid from 65.71% in December 2014 to 65.15% by May.

The euro gained some ground against the dollar over the past week rising by 0.08% to stand at €/$ 1.0951. In fact, investors have not fully factored in the September hike in the US Federal Reserve’s rate and are still holding off on making big moves on the market.

Gold therefore recovered mildly from last week’s $1,079.46/ounce to $1,091.26/ounce, not only because of a weaker dollar over the past week but also because of concerns regarding China’s market crunch.

By Friday 31 July, 2015, 11:30 pm Beirut time, the dollar-pegged LP depreciated against the euro going from €/LP 1,649.51 to €/LP 1,650.86. The Nominal effective exchange Rate (NEER) decreased by a weekly 0.40% to 165.30 points, bringing its year-to-date gains to 12.20%. 

Euro / LP1,650.861,649.510.08% 
Euro / Dollar1.09511.09420.08% 
NEER Index**165.30165.97-0.40%12.20%

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