Social media sites were abuzz with news about the Central Bank of Libya’s intention to reduce the dinar’s exchange rate against foreign currencies.
The sources explained, “The new management of the bank is working hard to enhance the stability of the dinar and strengthen its position, by implementing a package of economic measures.”
The sources added that “the bank aims, through these measures, to strengthen confidence in the dinar and stabilize the financial market,” pointing out that “these measures include reducing the volume of financial speculation that causes fluctuations in exchange rates, controlling cash liquidity, enhancing cash reserves, and developing economic partnerships with the authorities.” Local and international, which contributes to achieving sustainable financial stability.”
The sources confirmed that “the new bank management places among its priorities the protection of citizens’ purchasing power through financial and monetary policies aimed at containing inflation rates and avoiding the impact of exchange rate fluctuations on basic commodity prices.” They also stressed that “these measures will contribute to achieving exchange rate stability, in a way that supports… Market stability and the national economy in general.”
The House of Representatives reduced the tax imposed on foreign exchange sales from 27% to 20%, which led to an increase in the value of the dinar and a decline in the exchange rate of the dollar to 5.75 dinars instead of 6.10 dinars, while the price in the parallel market reached about six dinars.
The Central Bank of Libya announced earlier, “that foreign exchange reserves amounted to 84 billion dollars, including the currency cover, and funds belonging to other Libyan institutions managed by the bank, with the available free reserves reaching 29 billion dollars until the first quarter of the current year.”
Last updated: November 2, 2024 – 09:01
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Interview: Time.news Editor Conversations with Economic Expert on Libya’s Currency Strategy
Time.news Editor (TNE): Welcome to Time.news! Today, we have a special guest, Dr. Laila Al-Hamadi, an esteemed economist specializing in currency exchange and financial stability. Dr. Al-Hamadi, thank you for joining us.
Dr. Laila Al-Hamadi (LAH): Thank you for having me! It’s a pleasure to discuss such a timely and important topic.
TNE: Recently, social media erupted with the news about the Central Bank of Libya’s intentions to alter the exchange rate of the dinar against foreign currencies. Can you provide some context about why this is significant for Libya?
LAH: Absolutely. The dinar’s exchange rate is crucial because it affects everything from inflation to the purchasing power of citizens. Libya has been struggling with a volatile economy, and the central bank’s decision to adjust the exchange rate is an attempt to stabilize the financial landscape. It shows a proactive approach to improving confidence in the dinar.
TNE: The sources mentioned the new management’s commitment to implementing a series of economic measures. What are some of these measures, and how do they aim to enhance stability for the dinar?
LAH: The bank’s management is focused on several key measures. They plan to reduce financial speculation, which often leads to erratic exchange rate fluctuations. Controlling cash liquidity is also vital, as it helps manage the money supply and keep inflation in check. Additionally, building cash reserves and forming economic partnerships—both locally and internationally—can contribute to a more stable financial environment.
TNE: It sounds like a comprehensive strategy. In your opinion, how does controlling cash liquidity help stabilize the economy?
LAH: Controlling cash liquidity helps prevent an excess supply of money in circulation, which can drive inflation. By managing how much cash is available in the economy, the Central Bank can better regulate spending and investment, ultimately supporting more stable prices. This is essential for maintaining citizens’ purchasing power and ensuring economic growth.
TNE: You mentioned protecting citizens’ purchasing power. How critical is this aspect in the context of Libya’s current economic climate?
LAH: It is extremely critical. The purchasing power of citizens directly affects their quality of life. If inflation continues to rise unchecked, everyday goods become more expensive, which disproportionately impacts low- and middle-income families. By aiming to contain inflation rates, the Central Bank is effectively trying to shield the public from the harsh effects of economic instability.
TNE: What challenges do you foresee in implementing these economic measures?
LAH: One of the biggest challenges will be the reduction of financial speculation. Speculative trading can be deeply entrenched in a volatile market environment, and shifting that mindset can take time. Additionally, building effective partnerships with local and international authorities requires trust and cooperation, which can be difficult to establish, especially in politically sensitive environments like Libya.
TNE: In your view, what will determine the success of these initiatives by the Central Bank in the long run?
LAH: Long-term success will largely depend on transparency and communication from the Central Bank. If the public understands the rationale behind these measures, they may be more likely to support them. Additionally, consistent monitoring of inflation and market reactions will be essential, along with a willingness to adapt strategies as necessary. Sustainable development also hinges on broader economic reforms beyond monetary policy.
TNE: Thank you, Dr. Al-Hamadi, for sharing your insights. It’s clear that these decisions by the Central Bank of Libya have far-reaching implications for the economy and the everyday lives of its citizens.
LAH: Thank you for having me! It’s always a pleasure to discuss these vital issues.
TNE: And thank you to our audience for tuning in. Stay informed with Time.news for the latest updates on global economic developments.