Atia Al-Fitouri, a professor of economics at the University of Benghazi, commented on the ongoing debate about the possibility of abandoning the official fixed exchange rate system for the dinar and replacing it with a more flexible one.
Al-Fitouri explained in a post on his Facebook page that a flexible system is not compatible with the current situation because the source of foreign currency in Libya is crude oil exports, and its value goes exclusively to the Central Bank, which has an absolute monopoly on foreign currencies. He considered that implementing a flexible system in this case would only lead to the erosion of the dinar’s value, as is the case with a “crawling peg” system.
Al-Fitouri stated that the Libyan dinar has been pegged to foreign currency for 73 years due to the nature of the economy, which relies on exporting a single commodity to provide foreign exchange. He emphasized that the existence of a single owner of foreign currency in Libya necessitates maintaining the peg until the economy and exports are diversified.
He pointed out that a fixed system is the most suitable for Libya, comparing its situation to the Gulf countries that still peg their currencies to the US dollar. He added that the Libyan dinar has been pegged to the Special Drawing Rights (SDR) unit since 1986, which has made it more stable than pegging it to the dollar alone.