The Central Bank of Libya (CBL) has been engaged in a media briefing campaign in an attempt to frighten black-market foreign currency traders into lowering the dollar exchange rate and into frightening buyers into delaying their currency purchases. The black-market rate has been stubbornly stuck above the LD 10/dollar mark – today closing at LD 10.12 per dollar.
Injecting US$ 2.5 billion in the hope of hitting black-market traders
Today, the CBL leaked to media that as of next Wednesday, 1 April, it will inject US$ 2.5 billion to settle all pending requests for hard currency personal allowances, credits and reservations, and the demands of commercial banks.
It also leaked that it would continue to grant new approvals for credits and personal items reservations daily at a faster rate, following what it claimed were technical improvements in the system.
Oil revenues expected to reach about US$ 3 billion in April?
The CBL tried to give credibility to this by further leaking to local media that these measures come because of the improvement in oil revenues, which are expected to reach about US$ 3 billion in April. It added that it is in the process of preparing the controls and procedures for the sale of dollars in cash – the quantity to be sold to citizens will be announced later.
Psyching the black-market?
Meanwhile, yesterday, the CBL briefed that it is considering preparing a cash injection of one billion US dollars to inject into the market in one go, with the aim of achieving complete control and permanently closing the black-market currency market.
Imports of hard currency have started arriving?
The CBL also briefed yesterday that because of Governor Naji Issa and his team succeeding in restoring confidence in the CBL and the Libyan banking sector as whole, and in convincing international parties to supply dollars and euros in cash to Libya, hard currency deliveries have started arriving.
The CBL briefed that payments have already begun arriving at Tripoli’s Mitiga Airport, with the first payment arriving yesterday and the remaining payments will arrive successively to continue flowing on a regular monthly basis.
Are these just short-term sedatives?
It is to be seen if the CBL will succeed in strengthening the exchange rate of the Libyan dinar without real fundamental reforms to Libya’s economic, financial and fiscal system. Sceptics feel that it is as simple as supply and demand and that as long as the Libyan state continues to spend more than it earns in hard currency – pressure will continue on the beleaguered Libyan dinar.
Governor Issa’s credibility on the line?
Equally, it was last summer that CBL Governor Issa vowed to bring the LD-$ exchange rate to ‘‘below LD 7’’. Today it sits at over LD 10 per dollar! If Issa fails to bring the dollar to the LD 7 to 8 per dollar it could damage his credibility permanently.
