October 9, 2018 / 11:15 PM / in 6 months

New Libyan dinar rate not fixed -senior official

TRIPOLI, Oct 10 (Reuters) - The newly devaluated exchange rate of the Libyan dinar versus the dollar is not fixed and will alter based on market demand, a senior official said on Tuesday.

Last month, Libya’s internationally recognized government based in Tripoli imposed a fee of 183 percent on hard currency transactions, effectively devaluing the dinar to 3.9 versus the dollar compared to the official rate of around 1.4.

The move is meant to bridge the gap to the dominant black market, a source of corruption as armed groups with access to dollars at the official rate make huge profits through import scams.

“This price, 3.9 dinars, is a market price and it’s not fixed,” said Ahmed Maiteeq, deputy prime minister. He predicted a changing rate, without giving a target.

He said some commercial banks had started applying the new rate, granting credit letters worth up to $700 million.

“Some commercial banks are still unable to work through the economic program and that there will be supervisory committees to follow up with these banks to enable them to apply the reform,” he added, without identifying the lenders.

The fee is supposed to be paid on commercial transactions but it remains unclear how it will be collected as armed groups effectively control banks and stand to lose if they have to pay.

The issue of tackling the black market rate and economic reforms became urgent late in August after clashes between armed groups vying for access to public funds.

The U.N. brokered a ceasefire which has since been broken though the last few days have been relatively quiet in the capital.

Libya has been divided since 2014 by rival authorities in west and east amid widespread anarchy since the fall of Muammar Gaddafi in a NATO-backed uprising in 2011.

The eastern central bank has said it would implement the fee as done in the west of the country. (Reporting by Ahmed Elumami; writing by Ulf Laessing; editing by Grant McCool)

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