Service type: Economic Analysis
Overview
A multinational company with significant operational exposure in Libya required structured monitoring of Libya's foreign exchange environment and forward-looking analysis of the risks to currency stability – with direct implications for procurement costs, cash repatriation and financial planning.
The Challenge
Libya operates a dual exchange rate environment in which the official USD/LYD rate set by the Central Bank of Libya diverges materially from the parallel market rate available to most commercial operators.
The spread between the two — and the risk of sudden devaluations or restrictions on foreign currency access — is driven by a combination of oil revenue flows, political pressure on the CBL, and the fiscal positions of rival government institutions.
Understanding where the rate is heading requires intelligence on political dynamics, not just macroeconomic data.
What We Did
Libya Desk provided a monthly foreign exchange monitoring and analysis service.
Each brief covered the current official and parallel market rates and the spread between them, an assessment of the CBL's foreign currency reserve position and its political constraints, identification of the near-term political and fiscal triggers most likely to generate rate movement or access restrictions, and a set of forward-looking scenarios with probability weightings and implications for the client's operational and financial planning.
The service also included ad hoc alerts when significant developments warranted immediate client notification outside the regular reporting cycle.
Outcome
The engagement was maintained on a rolling basis.
The scenario analysis proved accurate in anticipating two significant parallel market rate movements during the engagement period, enabling the client to adjust procurement and treasury operations ahead of the shifts.
Request the Full Case Study
Get in touch to request more details about this specific case study and discuss your requirements.