The The Impact of Security Instability on Local Currency Exchange Rate Fluctuations and Its Simulation in Both Official and Black Market
Keywords:
Black market, local currency, security stability, Libyan economy, official exchange rateAbstract
This study investigates the impact of security factors on the depreciation of the local currency and forecasts its exchange rate in both the official and black markets. The research employs the Johansen cointegration technique to estimate the long-term relationship and the Vector Error Correction Model (VECM) for short-term analysis, utilizing daily data from January 2018 to August 2024. Additionally, the study applies the Triple Exponential Smoothing (DES, ESE, H-W without seasonality, H-W Additive Seasonal, and H-W Multiplicative Seasonal) method to forecast the period from mid-August 2024 to mid-August 2025. The findings indicate that security instability (D2), driven by conflicts, has a significant long-term effect on the value of the Libyan dinar. Similarly, security instability (D3), caused by kidnappings and hostage situations, negatively influences the value of the local currency over the long term. The local currency is projected to continue depreciating in the official market, reaching approximately 6.9 dinars per dollar by August 2025. On the black market, it is expected to rise to around 8.50 dinars per dollar by early August 2025.
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Copyright (c) 2025 Journal of Economics and Political Sciences
This work is licensed under a Creative Commons Attribution 4.0 International License.
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Accepted 2025-05-13
Published 2025-05-27
