Tripoli currency, gold traders thrive

Civil war, more than two months of bombardment from the North Atlantic Treaty Organisation and international sanctions have battered Libya's economy. But in one corner of Tripoli's labyrinthine covered bazaar, at an intersection known to merchants as Libya's Wall Street, business is booming. Currency and gold traders, who have operated from a dusty crossroad at the Al Mushir Souq for four decades, say activity has surged during the war as Libyans seeking to preserve assets buy foreign cash and precious metals in bulk, or seek to move savings overseas. "My phone hasn't stopped ringing since the troubles came, and commission has never been higher ... the war is terrible, but we're helping people protect themselves, and it's really good for business," said a 35-year old trader who has worked at the souq since he graduated from a university 10 years ago. Six days a week, between the hours of noon and 6pm, traders holding fistfuls of currency shuttle between unmarked stores on each corner of the intersection, barking orders for foreign exchange or gold, which in March saw its black-market price rise more than 50 per cent over the benchmark rate amid fears over Libya's future. Clutching as many as four cellphones, the Al Mushir dealers, who spoke on condition of anonymity to avoid reprisals from Muammar Gaddafi's regime, said many Libyans bring bundles of cash to the market, which they exchange for dollars, then hoard. Others pay traders to transfer savings to their friends and family overseas using a system known as Hawala, in which customers pay a fee to deposit cash with a dealer and are given a password, which is then used by the money's recipient when the cash is collected from a trader's contact elsewhere. The biggest transfers, in some cases amounting to millions of dollars, have come from wealthy regime loyalists, in preparation to defect or to protect their assets, traders said. The expansion of trade in this corner of the market shows the toll that sanctions and war are exacting on Libya's economy and the regime of Gaddafi as it struggles to maintain power amid more than three months of civil war and a Nato bombing campaign. While the regime insists it is solvent, the twin drivers of economic growth, oil production and foreign investment, have evaporated, and the banking system has been hobbled. Libyan citizens also face an erosion of their savings and rapid inflation as imports of the goods they depend on dry up, increasing domestic pressure on the regime. Nato on Tuesday unleashed its heaviest 24 hours of airstrikes on Tripoli since the bombing campaign began in March, prompting Gaddafi to release an audiotape vowing to fight to the death. The intensification of hostilities saw the dinar weaken against the dollar after two weeks of stability, buoyed by signs that Libya's conflict was locked in a stalemate. On Wednesday, regime forces launched attacks close to the rebel-held town of Misrata. Traders said business began expanding immediately after government forces clashed with opposition protesters in Libya's eastern city of Benghazi on February 17. Initially, there was a gold rush, as consumers emptied bank accounts to convert their savings into safer physical assets. As the market price of gold climbed and the Libyan currency weakened, more people sought to exchange dinars for dollars or shift their holdings overseas, spurring a boom for the capital's currency dealers. Spooked by the rapid decrease in currency supplies in an economy almost solely dependent on cash, the government in March capped cash withdrawals at 1,000 dinars ($830) a month and reintroduced the large 10-dinar bank notes that had been taken out of circulation. That move stopped a run on the banks but bred fear among Libyans that their savings would dwindle or disappear. The Libyan government insists the dinar's value hasn't depreciated since the crisis began, with official rates fixed at 1.2 to the US dollar. But black-market rates suggest the currency has depreciated more than 50 per cent against the US currency in the past four months, hovering at about 1.7, with many expecting that level to fall further. From / Gulf News