Algerian Dinar Collapses Against The Euro In Banks

date 2017/08/04 views 383 comments 0

icon-writer Imane Kimouche/English version: Dalila Henache

Algerian dinar fell on Friday at the level of the Bank of Algeria against the European currency, after stability from June 2016 to July 2017.

Exchange rate of the euro reached 12.934 DZD against 19.200 DZD on the parallel market of hard currency in Algiers Port Said Square, amid the silence of the Bank of Algeria about any devaluation of the national currency, although it recently adopted a system of insurance for exchange risk.

After months of stability, the dinar fell sharply against the euro. 

Economist, Abderrahman Mebtoul, said that the dinar witnessed a sharp deterioration in recent years. 

The value of the national currency has been eroding against its Euro counterpart and even the US dollar due to the lack of production and the deterioration of the exchange reserves, and the high level of inflation, knowing that the Algerian dinar stabilized these days against the US dollar, as the exchange rate is equivalent at the official market to 109.38 DZD, which is almost the same price that is used for more than a year.

Expert Mabtoul asserted that the price of the dinar, which was equivalent to $ 4.94 in 1970, fell today to the equivalent of $109, while the euro at its inception in 2001 was equal to 69 DZD but reaches today the equivalent of 129 DZD, which is a sharp decline, by almost 100%, which represents 100 times in 16 years.

"This decline reveals the lack of dynamism of the productive sector in Algeria, by recording a strong conflict between the economic growth and exchange reserves, which derives its strength from hydrocarbon revenues".

According to a study that is conducted by the same expert, which copy is received by Echorouk, the exchange rate of the dinar against the foreign currencies is determined with flexibility in the banking transactions, and is subject to the principle of supply and demand, as it is subject to the internal value of the dinar, which is determined in accordance with the transactions between the banks and the foreign exchange market, as the dinar collapsed against the euro and the dollar as a result of the rate of inflation that is recorded in Algeria and the rate of global inflation, while the rate of inflation in developed countries is within 2% against the dinar, which remains a significant deterioration with no record of a decline in the prices of imported materials.

Monetary and Loan Board recently approved a draft regulation on a market between the exchange banks and the risk instruments of exchange, as the impetus for the adoption of this system by the Monetary and Loan Board, during its ordinary session on 10 July, was that the drainage system in Algeria was a floating system for currency, therefore, it presents, through the fluctuation of exchange rates, economic traders and investors to the risk of exchange during the implementation of international transactions that would cause large losses in exchange, the same expert explains.

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