Libya: Major crisis at the head of the Central Bank causes the dinar to fall against the dollar

The political deadlock in Libya continues, with the country facing a major crisis following the Libyan Presidential Council’s decision to dismiss Central Bank Governor Al-Siddik al-Kabir over a month ago.
The Council’s move to appoint a new Governor and Management Committee has intensified divisions within the country, as this authority lies with Parliament and the High Council of State.
The central bank crisis is having severe economic repercussions. Oil fields have been shut down, essential goods have become more expensive, and the Libyan dinar is rapidly depreciating against the dollar. On Monday, September 23, the black market exchange rate in Tripoli hit 8.20 dinars to the dollar—Libya’s worst rate since the fall of Muammar al-Gaddafi in 2011. The authorities responded by closing al-Mouchir, the capital’s main foreign exchange market, to curb speculation. Meanwhile, the official exchange rate remains at 4.7 dinars to the dollar, but many fear the rate on the black market could soon reach 10 dinars.
The surge in the dollar’s value on Libya’s unofficial market is largely driven by uncertainty surrounding the unresolved central bank crisis. This instability is fueling inflation, with food prices rising by 27.8% in a single month, according to the UN’s Food and Agriculture Organization (FAO).
Experts attribute the dinar’s depreciation to a drop in oil exports, which has reduced foreign currency inflows. The central bank’s inability to regulate the black market and enforce a unified exchange rate is also contributing to the economic turmoil. In the medium term, the situation may worsen. The former governor retained control of the central bank’s Swift code, and without it, Libya will struggle to import essential goods such as food and medicine. Furthermore, reconstruction and investment projects are expected to face significant delays.