Written by: Economics professor Dr. Helmi Al-Gmati<\/p>\n\n\n\n
After the dollar temporarily dropped to 7.90 dinars and then rose again today to 8.30 dinars, some analysts attributed the increase to demand from certain institutions through credit facilities and overdrafts, while others argued that the black market does not truly reflect the real exchange rate and therefore should not be used as a benchmark.<\/p>\n\n\n\n
But if we examine the issue from a realistic economic perspective, the story is far bigger than that.<\/p>\n\n\n\n
The first logical question is: if the Central Bank is truly injecting dollars continuously and implementing strong measures, why did the exchange rate rise again?<\/p>\n\n\n\n
Markets, in the end, do not lie. If the measures were sufficient, the dollar should have continued declining or at least stabilized near 7.90 dinars\u2014not climbed back above 8.30 dinars in such a short period.<\/p>\n\n\n\n
Simply put, there is demand for dollars stronger than the current measures can absorb.<\/p>\n\n\n\n
As for the argument that the rise was caused by credit facilities and overdrafts, the more important question is:<\/p>\n\n\n\n
Who allowed these facilities to be used for purchasing dollars instead of supporting production or investment?<\/p>\n\n\n\n
If banks provide liquidity or financing that ultimately flows into the parallel market, then this is evidence of a flaw in liquidity management and credit oversight by the Central Bank.<\/p>\n\n\n\n
It makes no sense to claim that we are fighting the rise of the dollar while, at the same time, there are channels indirectly financing demand for it.<\/p>\n\n\n\n
As for those who say the black market is not a real indicator, theoretically there is some truth to that\u2014but practically, Libya\u2019s situation is different.<\/p>\n\n\n\n
Let us be realistic.<\/p>\n\n\n\n
What exchange rate do importers, citizens seeking treatment, education, or money transfers, and even local commodity prices actually rely on\u2014the official rate or the parallel market rate?<\/p>\n\n\n\n
Unfortunately, the parallel market today affects everything, whether we like it or not. Ignoring it does not eliminate its influence.<\/p>\n\n\n\n
There is also another very important point.<\/p>\n\n\n\n
Some argue that Libya needs to reach a real and balanced exchange rate. That is correct and entirely reasonable. But the key question is:<\/p>\n\n\n\n
How do we get there?<\/p>\n\n\n\n
Through expanding public spending?<\/p>\n\n\n\n
Through injecting more liquidity?<\/p>\n\n\n\n
Through banking facilities that increase demand for dollars?<\/p>\n\n\n\n
Without controlling checks, letters of credit, and non-genuine demand?<\/p>\n\n\n\n
A balanced exchange rate requires a comprehensive policy involving fiscal discipline, liquidity control, and market confidence.<\/p>\n\n\n\n
The truth that must be stated is this:<\/p>\n\n\n\n
The market tested the Central Bank\u2014and was not fully convinced.<\/p>\n\n\n\n
If the market truly believed the dollar would continue falling, people would have sold dollars instead of buying them.<\/p>\n\n\n\n
But what actually happened was the opposite. As soon as people saw the rate fail to break below 7 dinars, they rushed back to buying out of fear, as if the market itself was saying: \u201cThis decline is temporary.\u201d<\/p>\n\n\n\n
And the result?<\/p>\n\n\n\n
The dollar climbed back to 8.30 dinars.<\/p>\n\n\n\n
We must admit that the problem today is not the dollar itself, but rather the reasons behind the demand for it.<\/p>\n\n\n\n
As long as genuine demand, checks, excess liquidity, and fear of the future continue feeding the market, it will be very difficult for any decline in the exchange rate to become sustainable.<\/p>\n\n\n\n
And if the root causes are not addressed, it is entirely possible that 8 dinars could become a new baseline rather than a temporary ceiling.<\/p>\n\n\n\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Written by: Economics professor Dr. Helmi Al-Gmati After the dollar temporarily dropped to 7.90 dinars and then rose again today to 8.30 dinars, some analysts attributed the increase to demand from certain institutions through credit facilities and overdrafts, while others argued that the black market does not truly reflect the real exchange rate and therefore […]<\/p>\n","protected":false},"author":13,"featured_media":256998,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[683],"tags":[636,613],"class_list":["post-256992","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economic-articles","tag-economy","tag-libya"],"acf":[],"_links":{"self":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts\/256992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/comments?post=256992"}],"version-history":[{"count":1,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts\/256992\/revisions"}],"predecessor-version":[{"id":257003,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/posts\/256992\/revisions\/257003"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/media\/256998"}],"wp:attachment":[{"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/media?parent=256992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/categories?post=256992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sada.ly\/en\/wp-json\/wp\/v2\/tags?post=256992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}