Attiya Al-Fitouri, Professor of Economics at the University of Benghazi, wrote an article:
There has been increasing discussion about the reasons behind the rise of the dollar in Libya’s black-market foreign exchange market, despite expectations that it would decline rather than rise due to increased supply.
In reality, only a few days have passed since dollars were injected into the economy, which is far too short a period to assess the impact of any economic policy. The effects of economic policies may take months before their true results become visible.
We know that when any central bank devalues the national currency in an attempt to reduce the balance of payments deficit, the positive impact does not appear immediately. In fact, the devaluation may initially worsen the deficit because the increase in import prices in local currency can exceed the increase in export prices. Therefore, it takes time before the intended positive effects appear.
In economics, this situation is illustrated by the J-Curve phenomenon.
J\text{-}Curve
The same applies when the central bank injects dollars into the market. Initially, demand for dollars remains high and exceeds supply. Only after some time — not days, but perhaps a month or more — does the desired effect begin to emerge, with supply surpassing demand as demand gradually declines.
We should not expect the effects of any economic policy to appear immediately after implementation. Time is required for markets and economic behavior to adjust, which is why timing itself is considered a major factor influencing the success of any economic policy.
As is well known, this does not apply to letters of credit or credit facilities, since those transactions are conducted through bank transfers rather than physical cash.
