All monetary aggregates ended the week of June 2, 2022 on a negative note. The sharp drop in money supply may be attributed to the strong appetite of individual and corporate depositors to purchase US Dollar bank notes on the sayrafa platform through banks to benefit from the Central Bank decision to facilitate USD bank notes purchase up to the ceilings set by banks, once per month, and this till the end of June. This has prompted USD bank notes holders to sell and buy back the hard currency and make immediate capital gains in Lebanese pound. The overall money supply, “M4”, narrowed by LBP 2,901.59 billion on a weekly basis and by 2.97% on an annual basis to LBP 208,262 billion, notwithstanding the LBP 166 billion increase in the non-banking sector’s Treasury bills portfolio during the concerned week.

In parallel, Lebanese-Pound denominated deposits and currency in circulation, “M1”, contracted by LBP 2,953.29 million week-on-week to LBP 57,185 billion on the back of some LBP 3,673 billion decrease in currency in circulation, which outweighed the LBP 720 billion increase in demand deposits. Local currency term deposits, “M2”, also fell by LBP 2,983.53 billion on a weekly basis yet rose by 2.59% year-on-year to settle at LBP 76,288 billion.

Consequently, private sector term and saving deposits denominated in LBP (“M2-M1”) receded by LBP 30.24 billion (0.16%) to LBP 19,103 billion during the week of June 2, with deposits denominated in foreign currencies (“M3-M2”) sinking by LBP 83.57 billion (0.07%) to LBP 116,644 billion.