Libya’s dinar slide reopens black market concerns
Libya’s Central Bank is urging security authorities to close unlicensed foreign exchange outlets after the dinar slid again on the black market, as reported by Libya Herald and agencies on May 12th.
This development arose from a leaked letter from Central Bank (CBL) Governor Naji Issa to the Interior Ministry, Internal Security, Criminal Investigation and Municipal Guard agencies, urging them to take immediate legal action against shops, companies and offices operating without final authorisation from the CBL.
The governor also called for the closure of electronic applications and WhatsApp groups used by unofficial currency dealers while asking authorities to investigate the origin of funds held by these operators under anti money laundering and counter terrorism financing rules.
The Libyan dinar has reportedly fallen back to more than LD 8 to the dollar on the black market, after earlier stabilising between LD 7.50 and LD 7.75. The rate was reported at around LD 8.25 on May 11th, widening the gap with the official rate of around LD 6.5.
Issa had previously said he wanted to reduce the gap between the official and unofficial rates to around 5 percent and bring the black market rate below LD 7 to the dollar. That target now appears more difficult as traders adjust to the Central Bank’s recent measures.
Libya’s unofficial FX market is large, politically protected and difficult to dismantle, especially when trading also takes place through private digital channels. Closing physical shops is one relatively simple but shutting down WhatsApp based dealing networks is far more complicated.
The Central Bank could still provide another injection of dollars, tighten controls and pressure security agencies but the dinar will still remain vulnerable as long as demand for hard currency is high, confidence is fragile and informal networks continue to dominate access to foreign exchange with further complications related to international trafficking and money laundering.
Libya Herald plus agencies, maghrebi.org
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