{"id":252974,"date":"2025-02-04T12:46:54","date_gmt":"2025-02-04T10:46:54","guid":{"rendered":"https:\/\/sada.ly\/en\/?p=252974"},"modified":"2025-02-05T12:56:46","modified_gmt":"2025-02-05T10:56:46","slug":"exclusive-abu-sriwil-comments-on-the-activation-of-exchange-services-in-libya-motives-and-effects-on-the-parallel-market-and-exchange-rate","status":"publish","type":"post","link":"https:\/\/sada.ly\/en\/exclusive-abu-sriwil-comments-on-the-activation-of-exchange-services-in-libya-motives-and-effects-on-the-parallel-market-and-exchange-rate\/","title":{"rendered":"Exclusive: Abu Sriwil Comments on the Activation of Exchange Services in Libya \u2013 Motives and Effects on the Parallel Market and Exchange Rate"},"content":{"rendered":"\n
International expert Yassin Abusriwil spoke exclusively to our source, stating: He added: According to our analysis, the decision could be driven by the following factors:<\/p>\n\n\n\n The parallel market remains the primary source of foreign currencies in Libya due to restrictions on purchasing foreign currency through official channels. This fosters speculation and creates a significant disparity between the official exchange rate and the black market rate, leading to sharp economic fluctuations. Activating exchange companies aims to provide official alternatives that reduce reliance on the parallel market.<\/p>\n\n\n\n By activating exchange services, the Central Bank of Libya seeks to strengthen oversight of foreign currency flows, which helps combat money laundering and the financing of illegal activities. This step also allows for the collection of accurate data on foreign currency demand, improving the effectiveness of monetary policies and aligning with international regulations.<\/p>\n\n\n\n Libyan banks face liquidity issues and difficulties in executing international financial transactions, pushing individuals and businesses toward the parallel market. Activating exchange companies could ease pressure on banks, offering faster and more flexible alternatives for financial transfers and currency purchases.<\/p>\n\n\n\n Having official exchange channels enables the central bank to intervene more effectively in determining the exchange rate, narrowing the gap between the official rate and the parallel market, thus contributing to relative economic stability.<\/p>\n\n\n\n This decision is expected to bring greater regulation to the foreign exchange market, ensuring transactions follow clear, monitored procedures, thereby reducing risks of manipulation and speculation.<\/p>\n\n\n\n With official exchange services available, individuals and businesses can access foreign currency at more stable rates, limiting financial market disruptions and boosting confidence in the banking sector.<\/p>\n\n\n\n Making foreign currency available through official channels will facilitate imports and financial transfers, fostering a better business climate and enhancing the private sector\u2019s ability to plan and invest effectively.<\/p>\n\n\n\n As foreign currency becomes available through official exchange companies, demand for the parallel market is expected to decline, especially if official rates are competitive and meet market needs.<\/p>\n\n\n\n With increased foreign currency supply through licensed exchange companies, the disparity between official and black market rates will shrink, reducing speculation and fostering relative exchange rate stability.<\/p>\n\n\n\n If foreign currency distribution mechanisms through exchange companies are not fair or sufficient to meet demand, a new parallel market may emerge, with individuals circumventing restrictions, potentially sustaining some speculative activities.<\/p>\n\n\n\n If exchange market regulation increases public confidence in official channels, the Libyan dinar may see slight appreciation against foreign currencies. However, if the new system fails to meet market demand, pressure on the exchange rate may persist.<\/p>\n\n\n\n Regarding the ongoing availability of foreign currency, Abu Sriwil stated that several key factors influence whether companies can access foreign currency, including:<\/p>\n\n\n\n Abu Sriwil concluded: International expert Yassin Abusriwil spoke exclusively to our source, stating:In light of the economic challenges Libya faces, the Central Bank of Libya seeks to implement measures aimed at regulating the foreign exchange market and enhancing financial stability. Among these measures is the activation and regulation of exchange services\u2014a decision that carries clear economic objectives but […]<\/p>\n","protected":false},"author":13,"featured_media":252975,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"iawp_total_views":0,"footnotes":""},"categories":[2],"tags":[658,613,790],"class_list":["post-252974","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-exchange-rate","tag-libya","tag-parallel-market"],"acf":[],"yoast_head":"\n
In light of the economic challenges Libya faces, the Central Bank of Libya seeks to implement measures aimed at regulating the foreign exchange market and enhancing financial stability. Among these measures is the activation and regulation of exchange services\u2014a decision that carries clear economic objectives but also raises questions about its impact on the parallel market, exchange rate, and the continued inflow of foreign currency in response to growing market demand.<\/em><\/p>\n\n\n\n
In this article, we outline our perspective on the reasons behind this measure, analyze its potential effects, and focus on its implications for the Libyan economy.<\/em><\/p>\n\n\n\nFirst: Reasons Behind the Central Bank of Libya\u2019s Decision<\/strong><\/h3>\n\n\n\n
1. Reducing Dependence on the Parallel Market<\/strong><\/h4>\n\n\n\n
2. Enhancing Transparency and Financial Oversight<\/strong><\/h4>\n\n\n\n
3. Improving Banking Sector Efficiency<\/strong><\/h4>\n\n\n\n
4. Reducing Exchange Rate Volatility<\/strong><\/h4>\n\n\n\n
Second: Expected Effects and Outcomes of Activating Exchange Services<\/strong><\/h3>\n\n\n\n
1. Organizing the Foreign Exchange Market<\/strong><\/h4>\n\n\n\n
2. Strengthening Financial Stability<\/strong><\/h4>\n\n\n\n
3. Improving the Business and Investment Environment<\/strong><\/h4>\n\n\n\n
Third: Impact on the Parallel Market and Exchange Rate<\/strong><\/h3>\n\n\n\n
1. Lower Demand for the Parallel Market<\/strong><\/h4>\n\n\n\n
2. Narrowing the Gap Between Official and Parallel Market Rates<\/strong><\/h4>\n\n\n\n
3. Possibility of a New Parallel Market Emerging<\/strong><\/h4>\n\n\n\n
4. Impact on the Libyan Dinar\u2019s Value<\/strong><\/h4>\n\n\n\n
The Continued Flow of Foreign Currency: Challenges and Solutions<\/strong><\/h3>\n\n\n\n
\n
The Role of Supply and Demand in Sustainability<\/strong><\/h4>\n\n\n\n
\n
Proposed Solutions to Ensure Foreign Currency Availability<\/strong><\/h3>\n\n\n\n
\n
Final Thoughts<\/strong><\/h3>\n\n\n\n
Activating exchange services in Libya is a crucial step toward regulating the foreign exchange market and promoting financial stability. However, it is not a standalone solution to the economic issues related to the exchange rate and parallel market. The long-term success of this measure depends on the Central Bank of Libya\u2019s ability to meet rising demand for foreign currency and the flexibility of monetary policies to adapt to economic changes. If implemented within a broader financial and banking reform strategy, this initiative could help curb speculation and contribute to greater economic stability.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"