Algerian dinar falls by 9 percent to the Euro

Algerians’ purchasing power will be dramatically hit as local dinar value decreased by more than 9 percent in the last three months as Euro exchange rate Wednesday reached 111.25 DZ officially. This has been a record fall since Euro currency was launched.

Finance experts sounded the alarm over the national currency deacreasing value and its negative consequences on the economic system in terms of commercial relations and imports bill.

The price of imported goods including food, cars, home appliances has been on the rise since the begining of October.

Economist Fares Messdour believes that the dinar decreasing value is due to technical considerations as it is a direct result of inflation which reached record levels in 2012.

He warned of possible consequences, saying Algeria will enter a « terrible vicious circle similar to that of October 5th, 1988. »

« The purchasing power will decline soon, » he said.

According to the economist, the deccrease will cause a sharp inclease of imported commodities within a few weeks such as cars, home appliances and food. It will have a limited impact on main consumption products such as semolina, milk, sugar and cooking oil as they are subsidized by the State.

He added that its very difficlut not to make a link between the dinar decrsaeing value and the government’s plan to reduce imports which are expected to reach $60 billion this year.

« Although the Bank of Algeria did not receive official instructions to qharply reduce the dinar’s value, the government’s discourse about imports may have encouraged the Bank to regulate the dinar’s value. »