Breakthrough expected in LD-dollar FX market: Central Bank launches comprehensive cash sales plan and distributes US$ 1 billion to banks

In a significant move to stabilize its economy, the Central Bank of Libya (CBL) has unveiled a robust package of measures designed to overhaul the foreign exchange market. This initiative, set to be discussed in an expanded meeting with commercial bank managers, aims to streamline dollar sales, boost transparency, and ultimately bolster the value of the Libyan Dinar.

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The meeting aimed to establish implementation mechanisms that ensure smooth sales and enhance transparency.

The CBL's proactive approach comes at a time when the Libyan Dinar has shown considerable strength in the black market, trading below 7 dinars to the dollar. This positive trend is attributed to the CBL's concerted efforts over the past two months to inject dollars and liquidity into the market. The recent agreement on a unified budget for the entire country and the surge in international crude oil prices, partly influenced by the Iran conflict, have also provided a favorable backdrop for these economic reforms.

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In a practical step, the CBL confirmed that an initial payment of US$ 1 billion in cash will be distributed to banks.

A key component of the new plan involves the distribution of $1 billion in cash to commercial banks. Customers will be able to access foreign currency through a dedicated system, choosing their preferred bank and branch for transactions such as cash withdrawals, money transfers, or inter-account transfers. The CBL has set a limit of $2,000 for cash withdrawals, with the remainder to be settled in Libyan Dinars at the official exchange rate, capped at 6.43 dinars per dollar. Furthermore, the bank intends to implement a 'restricted deposit' tool and resume dollar transfers between accounts, signaling a comprehensive effort to facilitate vital economic activities and restore confidence in Libya's financial system.

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Customers will be able to choose their bank and branch within the system and specify the type of transaction: cash, money transfer, or inter-account transfer.