Weekly Report of Bank Audi: Banque du Liban's Gold Reserves Exceed $40 Billion for the First Time

Following the open letter issued by the "Association of Banks in Lebanon" to local authorities and to the Lebanese public in general, especially depositors, which reveals its opposition to the content of the "Financial Regularization and Deposit Recovery Law" in its ninth version, and awaiting the Cabinet session next Monday to discuss the draft law after some amendments were made in line with the International Monetary Fund's requirements, the Lebanese financial markets witnessed a decline in Eurobond prices, while the stock market recorded price increases and the exchange rate of the Lebanese pound against the dollar remained stable in the parallel market, according to Bank Audi's weekly report.

In detail, the Lebanese Eurobond market saw net sales by foreign institutional investors this week, resulting in a price decrease along the yield curve from 23.50-23.75 cents per dollar at the end of the previous week to 23.15-23.25 cents per dollar on Friday. Regarding the stock market, the Beirut Stock Exchange recorded a 3% price increase, supported by Solidere shares, following five consecutive weeks of declines totaling 8%.

Simultaneously, trading volumes rose from $5.3 million (excluding over-the-counter transactions) in the previous week to $18.8 million (excluding over-the-counter transactions) this week. In the currency trading market, the exchange rate of the Lebanese pound against the dollar remained within narrow margins in the parallel market around 89,600-89,700, while Banque du Liban's liquid foreign currency reserves continued to grow during the first half of December, reaching about $12 billion mid-month, accumulating net increases of $1.852 billion since the beginning of this year.

Markets

In the money market: The interbank interest rate fell from 80% at the end of the previous week to 5% on Friday, indicating the availability of liquidity in Lebanese pounds within the money market. The latest monetary statistics issued by Banque du Liban for the week ending December 4, 2025, showed that resident bank deposits decreased by 14,270 billion Lebanese pounds.

This weekly decrease is attributed to a decline in resident foreign currency bank deposits by 12,022 billion Lebanese pounds weekly (equivalent to $134.3 million at the official exchange rate of 89,500 LBP), while resident Lebanese pound deposits fell by 2,249 billion Lebanese pounds amid a decrease in demand deposits in Lebanese pounds by 1,777 billion Lebanese pounds and a decline in savings deposits in Lebanese pounds by 472 billion Lebanese pounds.

In this context, the broad money supply (M4) contracted by 13,150 billion Lebanese pounds weekly amid growth in currency in circulation by 1,141 billion Lebanese pounds and a slight decrease in the treasury bills portfolio subscribed by the non-banking sector by 21 billion Lebanese pounds.

In the foreign exchange market: The exchange rate of the Lebanese pound against the dollar recorded marginal movements this week in the parallel market within the range of 89,600-89,700, while Banque du Liban's liquid foreign currency reserves continued their upward trend during the first half of December.

In detail, Banque du Liban's latest semi-monthly balance sheet ending December 15, 2025, showed that the central bank's liquid reserves in foreign currencies reached about $11.987 billion in mid-December compared to $11.849 billion at the end of November, a growth of $138 million during the first half of the month. In this context, the central bank's reserves have accumulated net increases of $1.852 billion since the beginning of this year.

Simultaneously, Banque du Liban's gold reserves reached $40.032 billion in mid-December (9.2 million ounces at $4,351 per ounce) compared to $24.102 billion at the end of December 2024, an increase of $15.93 billion since the beginning of 2025. This rise comes amid notable demand for safe investments due to concerns about the repercussions of the new U.S. customs policy on global economic growth and following three interest rate cuts totaling 75 basis points by the U.S. Federal Reserve this year. Meanwhile, the volume of currency in circulation outside Banque du Liban reached about 71.1 trillion Lebanese pounds in mid-December 2025 compared to 65.6 trillion Lebanese pounds at the end of December 2024, an increase of 5.5 trillion Lebanese pounds since the beginning of the year, equivalent to $62 million.

In the stock market: The Beirut Stock Exchange followed an upward trend this week, as indicated by a 2.8% decline in the price index, noting that this comes after five consecutive weeks of declines. Out of seven traded stocks, prices of two shares rose, three shares fell, and two shares remained stable. In detail, Solidere A shares jumped 6.2% to $77.55, and Solidere B shares increased 5.7% to $78.25. Regarding banking stocks, Bank Audi ordinary shares fell 13.2% to $1.91. Bank Byblos ordinary shares declined 8.5% to $0.54. Depositary receipts of Bank of Lebanon and the Gulf closed down 1.8% to $6.38.

Conversely, Lebanese Bank of Commerce ordinary shares remained stable at $0.93. Preferred shares category E of Lebanese Bank of Commerce remained steady at $59.50. Trading volumes increased from $5.3 million (excluding over-the-counter transactions) in the previous week to $18.8 million (excluding over-the-counter transactions on Solidere shares) this week, noting that banking stocks accounted for 88.3% of the activity while Solidere shares took the remaining 11.7%.

Eurobond market: The Eurobond market witnessed net sales by foreign institutional investors this week, as some investors sought to rearrange their portfolios before the end of 2025, noting that government debt bonds have accumulated price increases exceeding 80% since the end of 2024 (when they were trading around 12.75 cents per dollar at the end of December 2024).

In this context, prices of bonds maturing between 2020 and 2025 closed at 23.15-24.15 cents per dollar on Friday compared to 23.50-24.50 cents per dollar at the end of the previous week. Prices of Eurobonds maturing between 2026 and 2037 declined to 23.25-24.25 cents per dollar on Friday compared to 23.75-24.75 cents per dollar at the end of the previous week.