The parallel market for foreign exchange - the Libyan dinar against the US dollar
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Parallel Market, Foreign Exchange, The US Dollar, The Libyan Dinar
Abstract
This research aims to shed light on the parallel market for foreign exchange in Libya while highlighting development. Then it addresses the determinants of demand and supply of this market. This study adopted the descriptive-analytical approach to study the growth in the parallel market exchange rate in Libya. Annual data on the average exchange rate in the Libyan parallel market during 1970-2020 were collected and combined. In addition, we used data representing the contribution of the oil sector and the non-oil sector as a percentage of the gross domestic product during 1969-2017. We used current and adjusted annual average price data on US crude oil per barrel during 970-2017. The results indicated that the parallel market in Libya began to appear in the eighties, then it is expanded in the early nineties. The economic policy pursued by the government at the end of the nineties until 2003 succeeded in addressing the parallel market, as it settled and almost disappeared. Then it reappeared in 2011. Its strength intensified in 2014, during the closing of the oil fields and ports for the oil export. The parallel market reappeared again at the beginning of 2020. The results indicated that fluctuations in oil prices in international markets and instability in the quantities exported from it are considered important determinants of demand and supply of foreign exchange in the parallel market in Libya.
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