The Libyan dinar kept its gains over the last week on the prospect of more hard currency being released into the Libyan market starting next week. The US dollar had been selling at a peak of LD 9.80 towards the end of 2017 and fell sharply to LD 8.25 last week. It lost more value in early trading today, down to LD 8.20.
A Tripoli-based black-market hard currency trader today told Libya Herald,on the basis of anonymity, that ‘‘the dollar has lost value against the dinar because of the expectation that more dollars are going to be available on the market. Therefore, we are expecting demand for the dollar on the black market to fall further’’.
‘‘The Central Bank of Libya (CBL) had already announced last year that it was increasing the annual family dollar allowance from US$ 400 to US$ 500. It is going to start distributing it tomorrow (Monday 15 January). This has gained the dinar more value on the anticipation of more supply on the market. These will add billions onto the market’’, he explained.
Moreover, ‘‘The CBL has approved about 1.5 bn of Letters of Credit, again reducing demand for the dollar, but also the CBL has changed policy by accepting all 100 percent of the payment for LCs by cheque. Previously 30 percent of any LC had to be deposited in cash. Thats quite a difference’’, he added.
‘‘But generally, there is less demand for hard currency anyway. People are running out of cash and money generally in order to buy any hard currency. People may have money in their bank accounts, but the cash-crisis means they cannot access their money to buy dollars even if they wanted to’’.
‘‘Remember, there is a 50 percent surcharge on paying by cheque. That is too steep for many potential dollar buyers. So demand for dollars is falling too’’, the black-market trader explained.
Looking forward the trader went as far as to forecast that ‘‘the dollar would continue to fall in value as the effects of the LCs and the family allowance kick into the market’’.
‘‘I expect the dollar to fall down to as low as LD 7.90 over the coming weeks, if nothing (politically) major (that is negative) happens’’.
But he also admitted that ‘‘politically there is less tension in the air with no obvious incidents to worry the market’’.
It will also be recalled that the CBL had released relatively positive economic news
showing an end to the balance of trade deficit, control over state-sector salaries and a reduction of the overall annual budget deficit for 2017.
Equally, on the political side, there is a general anticipation of what the planned 2018 elections might bring in the coming year.
