An economic expert explains the reason for the noticeable rise in the dollar in the parallel market

Al-Fitouri added, in a post on his Facebook page, that suppliers resort to purchasing the value of their imports from the parallel market, as they have no other source to obtain their foreign currency needs.

He pointed out that the majority of credits are opened by debiting customers’ bank accounts, and not by paying their value in cash (cash), explaining that when the value of the dinar was reduced by 70% at the beginning of the year 2021, this raised the value of the dollar against the Libyan currency by 220%, which means that The price of the US currency has more than doubled.

He stated that the decision led to a reduction in demand for the dinar. Also, “the bank was supposed to adhere to its announcement of its readiness to sell the dollar to whoever requested it by authorizing commercial banks to sell the dollar, whether by opening credits or for personal purposes, and there were promises to do so.”

He continued: “This meant that there would be no parallel market for the dollar, so the situation would return to what it was in 2010 and the years before that, and in return the Central Bank would fulfill its promises, but the parallel market continued, and the price of the dollar rose these days to higher than it was.” Before the devaluation of the dinar in 2021.

Al-Fitouri believes that the instability of the Central Bank’s conditions and policies is behind the rise in the price of the dollar in the parallel market, explaining that “dealers in this market have a high sensitivity to instability and uncertainty, so when the demand for the dollar increases while its supply decreases, the price of the American currency rises in this market.”

Regarding the issue of liquidity, he said that it arises from the lack of confidence of individuals in commercial banks, and the division of the Central Bank. “Individuals do not want to deposit the value of their sales in banks, and therefore the majority of the money that comes out of these banks is not re-deposited in the banks for fear of losing this money.” Money, as happened, for example, in Lebanon.

The economic analyst stressed that the liquidity problem will not be completely resolved “unless the central bank is truly unified, and a new governor is elected who has full knowledge of economic policies and their effects, with an effective board of directors, and a committee specialized in monetary policy.”

The middle source