The Central Bank of Libya (CBL) has issued a circular permitting licensed foreign exchange (FX) bureaux to sell foreign exchange at a profit margin of 7 percent above the officially set CBL foreign exchange rate.
The CBL warned that it will be conducting regular inspections on officially licensed FX bureaux to ensure conformity to its official profit margin.
It will be recalled that on 3 February this year the CBL approved 64 applications for the opening of Foreign Exchange Bureaux. These will be the first such official FX bureaux since before the Qaddafi era in 1969.
The CBL also announced on 28 February that it had granted another 71 new FX bureaux licenses, bringing the total number of licenses approved to 135 companies and exchange offices.
The CBL also announced the opening of new applications for obtaining the initial approval for the establishment of FX bureaux, starting from 1 March until 30 June 2025.
It is noteworthy that the CBL began receiving applications for FX bureaux since 3 November 2024 from those that had previously obtained initial approvals.
The 7 percent profit margin
Commenting on the 7 percent profit margin, which was deemed rather high by some, analysts believe it was set deliberately high by the CBL to make it commercially unviable for black-market FX operators to continue in business. It will be seen if the current dominant FX black market will be put out of business or whether the two will co-exist.
CBL aims to control the FX market
The move by the CBL to allow officially regulated FX Bureaux comes as part of its effort to regulate the sale of foreign currency exclusively through legal and licensed bodies. This, the CBL hopes, would enable it to supervise and control these operations is in accordance with the laws and regulations governing the FX business.
The FX black/parallel market has been dominant
Currently a very active and effective black/parallel FX market operates across Libya. The black-market Libyan dinar exchange rate is always worse than the official rate set by the CBL. The authorities have often accused this market of artificially keeping the exchange rate of the Libyan dinar against major international currencies low – to the detriment of the Libyan economy and Libyan public.
Because the official and better Libyan dinar exchange rate set by the CBL is only accessible through a bank account, it makes it easier to obtain foreign currency, but at a higher rate, in the black-market.
Even the Grand Mufti wades in on LD FX rate
It must be noted that the black-market FX rate of the Libyan dinar has become the barometer of the success, or lack of, of the successive interim Libyan governments since the end of the Qaddafi regime in 2011.
The Grand Mufti, the head of Dar Il Ifta, Libya’s religious council, also waded in on the poor exchange rate of the Libyan dinar. He lamented the economic suffering of Libyans and taunted politicians and administrators for not resigning as a result of their failures.
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