Libya’s black market outpaces dollar injections

Currency speculators continue to play a significant role in Libya’s parallel foreign exchange market, potentially limiting the effectiveness of official interventions, according to a former official at the Central Bank of Libya.

In remarks to Libya Al-Ahrar TV, monitored by Libyan Express, Maraj Ghith said that injecting US dollars into the market may help ease pressure on exchange rates in the short term, but is unlikely to provide a lasting solution given the scale of unregulated demand.

He explained that the parallel market operates with limited transparency, making it difficult for authorities to assess its size or anticipate its movements. By contrast, the formal banking sector is subject to oversight and can be monitored through established mechanisms such as letters of credit and documentary transfers.

Ghith noted that, under current conditions, it would be challenging for any central bank to fully match or influence a market where demand patterns are not clearly defined.

On monetary policy, he said that printing additional currency may indicate ongoing liquidity constraints within the banking system. While such measures can help address cash shortages, they may appear inconsistent with efforts to encourage electronic payments and reduce reliance on physical cash.

He added that the Central Bank of Libya is working to strengthen confidence among the public, but said that this objective depends on broader coordination across government institutions and cannot be achieved by the central bank alone.

Ghith also reiterated calls to channel imports through official banking procedures, including letters of credit and documentary transfers, suggesting that this could help reduce reliance on the parallel market.