| 17/03/2023 | 10/03/2023 | %Change | YTD | |
| Euro / LP | 15,966.00 | 15,964.50 | 0.01% | 894.62% |
| Euro / Dollar | 1.0644 | 1.0643 | 0.01% | -0.04% |
| NEER Index | 117.10 | 117.26 | -0.14% | -31.33% |
Lebanese Forex Market
The Lebanese Pound (LBP) remained steady within the new official rate of USD/LBP 15,000 by March 10, 2023.
Lebanon’s currency hit a new low of 100,000 to the US dollar on Tuesday, March 14 according to the unofficial market rates. In more details, this week, the Lebanese pound oscillated around LBP 97,144 per USD and ended the week at LBP 108,500 per USD.
As for the Euro/LBP currency pair, the Euro slightly appreciated against the dollar-pegged LBP with the currency pair going from last week €/LBP 15,964.5 by March 10, 2023 to 15,966 by March 17, 2023. Moreover, the Nominal Effective Exchange Rate (NEER) of the Lebanese pound went down by 0.14% weekly to stand at 117.1 points on March 17, 2023.
International Forex Market
This week, the US dollar traded on a negative territory amid the collapse of Silicon Valley and Signature Banks. In fact, the collapse of the mentioned banks marked the largest bank failure since the 2008 financial crisis and sent shockwaves across global financial markets. US regional banks came under particularly intense pressure as concern grew among customers and investors about the financial health of other institutions. Consequently, the DXY index dropped by -0.45% on a weekly basis and traded at 104.101 by Friday March 17, 2023.
The Euro slightly appreciated against the dollar by +0.06% to $1.0649 amid weaker US dollar. Furthermore, the European Central Bank (ECB) raised interest rates as promised by 50 basis points on Thursday, March 16 sticking with its fight against inflation and facing down calls by some investors to hold back on policy tightening until turmoil in the banking sector eases. As such, the benchmark interest rate now reached 3.5%.
The British pound also appreciated against the US dollar by +0.84% to stand at $1.2131, as fears of a banking crisis in the US eased after a group of big US banks announced a $30 billion rescue package for First Republic Bank in an effort to prevent it from becoming the third to fail in less than a week. At the same time, the Bank of England is expected to hike interest rates by 25 bps next week, before ending its current policy tightening cycle. Moreover, British finance minister Jeremy Hunt pledged on Wednesday to halve inflation, reduce debt and get the economy growing, saying the UK would not enter a technical recession this year and inflation would likely fall to 2.9% by the end of 2023.
On Friday, the Yen appreciated against the US dollar by +1.45% on a weekly basis to stand at 133.04 USD/ JPY amid a flight to safety after the collapse of Credit Suisse in Switzerland. The BOJ left its policy of ultra-low interest rates unchanged this month, in what was Governor Haruhiko Kuroda’s final policy meeting before retirement.
In China, the Yuan appreciated against the dollar by +0.47% to 6.8848 on a weekly basis. Economic data pointed to an uneven economic recovery since China dismantled its zero-Covid policy. Official data showed that retail sales in the country turned to growth in the first two months of 2023, but industrial production expanded less than expected, and the property sector remained weak. On the policy front, the Bank of China cut the reserve requirement ratio for financial institutions by 25bps in March; it is the first rate cut in banks’ reserve ratio since December in an attempt to stimulate the economy.
Elsewhere, the Australian dollar appreciated by +1.98% on a weekly basis to stand at 0.671 AUD/USD by March 17, 2023. Meanwhile, the Canadian dollar depreciated by 1% on a weekly basis touching CAD$ 1.3693 for a US dollar.
Commodities
Gold prices increased remarkably by 3.39% to stand at $1,931.57/ ounce on March 17, 2023, compared to $1,868.26/ ounce in the previous week. In fact, gold headed for its biggest weekly gain since November after attracting haven demand due to banking turmoil in the US and Europe, in addition to a weaker dollar.
Crude oil’ prices dropped remarkably by -9.74% to stand at $69.21/barrel on March 17, 2023 compared to $76.68/barrel in the previous week. In fact, concerns in the banking sector following Silicon Valley Bank’s collapse have punished oil prices this week as people fear that it would threaten global demand. However, we believe the sharp move may be an overreaction as China’s demand indicators remain broadly positive, forming a strong fundamental backdrop for prices.