Libyan Dinar Plummets Against US Dollar on Black Market Amid Central Bank Crisis
The Libyan dinar has depreciated significantly against the US dollar on the black market due to a crisis of control at the central bank, which has drastically reduced oil production and exports.
Today, two black market vendors in Tripoli quoted a price of 7.95 dinars per dollar, compared to 7.36 last week, a drop of around 8%. The official exchange rate stands at 4.7 dinars per dollar.
The decline in the dinar's value suggests that the ongoing leadership conflict within the Central Bank of Libya (CBL) is starting to affect the economy more broadly, potentially destabilizing this key oil producer, according to Reuters.
Vendors attributed the dinar's decline to a shortage of dollars on the market, as the crisis has disrupted the issuance of letters of credit by the CBL, a crucial tool for monetary policy and foreign exchange transactions in Libya for years.
Furthermore, factions in eastern Libya have blocked most exports as a tactic in the conflict over the CBL, leading to a force majeure declaration on oil fields and cutting off the state's revenue source, given that the country's economy heavily relies on oil revenues.
The crisis began last month when the head of the Presidential Council, Mohammed al-Menfi, based in Tripoli, announced his decision to replace the central bank governor, Sadiq al-Kabir, which triggered a reaction from eastern factions.
