2023-09-08 12:32:00
Bank Audi indicated in its weekly report that “in parallel with the Council of Ministers’ decision to create a new currency trading platform as an alternative to the “banking” platform that has been suspended since the end of the term of the former governor of the Bank of Lebanon on July 31, 2023, and with the Central Bank’s continued efforts to strengthen the frameworks for Transparency and disclosure: As the Council of Ministers began discussing the draft budget for the year 2024, the Lebanese financial markets continued to witness marginal movements this week in the dollar exchange rate on the black market, while the stock market resumed its rise, and Eurobond prices remained relatively stable.
In details, the dollar exchange rate in the parallel market continued to move within narrow margins around 89,000 LBP, while the government approved the “Bloomberg” platform for currency trading amid efforts to establish transparency frameworks, especially in light of the new monetary economy, noting that the exchange rate will be determined. According to the forces of supply and demand, the Bank of Lebanon will not intervene in the market except in extreme cases. In parallel, the stock market recorded a price increase of 0.8%, while trading volumes increased fourfold weekly to reach approximately $31 million. In the Eurobond market, government debt bond prices remained stable at around 7.875 cents per dollar in light of the persistent political vacuum in the presidency and the confinement of government work to caretaker affairs, and in light of the slow implementation of urgent reforms to secure the required international support, while Lebanon is witnessing a new phase in Leadership of the Bank of Lebanon.
Markets
In the money market: The interest rate from day to day reached 85% on Friday, compared to 100% at the end of the previous week, while the cost of cash remained the same in the range of 1%-2%. The latest monetary statistics issued by the Bank of Lebanon for the week ending August 24, 2023 showed that resident bank deposits decreased by 838 billion pounds. This contraction is mainly due to a decrease in bank deposits denominated in foreign currencies by 886 billion liras per week (equivalent to 59 million dollars according to the official exchange rate of 15,000 liras), while bank deposits denominated in liras increased slightly by 48 billion liras amid an increase in… Demand deposits amounted to 103 billion liras, and a decline in savings deposits in lira amounted to 54 billion liras. In this context, the monetary mass in its broad sense (M4) recorded a weekly contraction of 1,115 billion liras in light of the decrease in the volume of cash in circulation by 1,037 billion liras and the increase in the portfolio of treasury bonds subscribed by the non-banking sector by 760 billion liras.
In the Treasury bond market: The preliminary results of the tenders dated September 7, 2023 showed that the Bank of Lebanon allowed banks to subscribe to all of their offers in the six-month category (with a return of 4.00%), the three-year category (with a return of 5.50%), and the seven-year category (with a return of 6.50%). On the other hand, the results of the tenders dated August 31, 2023 showed subscriptions of about 2,635 billion liras, distributed between 50 billion liras in the three-month category (with a return of 3.50%), 2,585 billion liras in the one-year category (with a return of 4.50%), and 44 million liras in the five-year category ( With a return of 6.00%). In contrast, benefits amounted to approximately 605 billion liras, resulting in a weekly nominal surplus of 2,030 billion liras. At the cumulative level, the total number of subscriptions during the first eight months of the year 2023 amounted to approximately 12,955 billion pounds, fully subscribed by the Bank of Lebanon, so that the one-year category accounted for 54.1% of it, followed by the two-year category with 22.3%, the six-month category with 13.4%, and the three-month category. Months by 7.7%, the three-year category by 1.6%, and the seven-year category by 0.9%, while the five-year category received only 0.01% of the total. On the other hand, entitlements worth 14,862 billion liras appeared, resulting in a nominal deficit of 1,907 billion liras in the first eight months of 2023.
In the currency market: While the Council of Ministers approved this week the adoption of “Bloomberg” as a platform for currency trading instead of the “Banking” platform that has been suspended since the end of last July, and in light of continuing efforts to strengthen transparency frameworks in monitoring trading operations in the market in preparation for unifying exchange rates, The black market for currency trading continued to witness marginal movements in the dollar exchange rate this week, settling at 89,000 LBP – 89,500 LBP. On Friday, unchanged compared to the previous weekend. Preparation for the launch of the “Bloomberg” platform comes amid efforts to preserve the remaining foreign exchange reserves of the Bank of Lebanon, which amounted to $8.5 billion until mid-August 2023, so that the dollar exchange rate is determined according to the forces of supply and demand, with almost no intervention from the Bank of Lebanon.
In the stock market: The stock market has resumed its rise, as evidenced by the rise in the price index by 0.8% weekly. In detail, Solidere B shares jumped by 4.0% this week to reach approximately $77.60, followed by Holcim Lebanon shares, with a modest increase of 0.1% to $69.00. On the other hand, Solidere A shares fell by 0.4% to $77.40. The prices of Bank Audi deposit receipts remained stable at $1.40. As for trading volumes, the nominal trading value on the Beirut Stock Exchange increased four-fold weekly to reach approximately $31 million, noting that Solidere shares accounted for the vast majority of activity (99.95%). In this context, it is worth noting that trading volumes on the Beirut Stock Exchange declined by 2.9% annually during the first eight months of 2023 to reach approximately $269 million, while the capitalization value increased by 36.5% between August 2022 and August 2023. Accordingly, the stock turnover rate was Calculated on the basis of annual turnover to market capitalization, a ratio of 2.2% in the first eight months of the year 2023, compared to a turnover rate of 3.1% in the corresponding period of the year 2022.
Eurobond market: Lebanese Eurobond prices remained stable at 7.875 cents per dollar this week, amid anticipation of the new financial and monetary phase being explored by the acting governor of the Bank of Lebanon, which some global financial circles consider an opportunity to improve the monetary system and the currencies system, and following the Cabinet’s decision to introduce… A new platform for currency trading amid a trend to gradually liberalize and unify the exchange rate, which is one of the requirements of the International Monetary Fund. Accordingly, Lebanese Eurobonds have accumulated price increases of approximately $2.13 to $2.25 since the beginning of 2023.
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