Dinar collapses and records its lowest level since Algeria’s independence!

date 2017/09/14 views 1539 comments 0

icon-writer Imène Kimouche /*/ English Version: Med.B.

The national currency, the Dinar, has been witnessing a continuous slump for a week at the level of banks. The exchange rate of the euro in the Bank of Algeria yesterday amounted to 134 dinars compared to 112 dinars versus the dollar, and the value of the Algerian dinar against all hard currencies in general, fell sharply as a result of this acute downturn.

Financial experts assert that the dinar reached on the official exchange market today its lowest level since Algeria’s independence.

"The collapse of the dinar for more than two weeks is not arbitrary or normal, but is a deliberate move by the Bank of Algeria, which regularly and deliberately entertains the “blackout” on the repeated depreciations of the national currency”, financial and monetary expert Dr. Kamel Si Mohamed said in a statement to Echorouk. 

The government is looking for new means to finance the deficit of the treasury and the budget, even by floating the currency, and this cannot bear any new decisions meant to reduce anew the dinar’s value, as this comes along with strict procedures designed to curb the country’s imports that consume a large proportion of state expenditures.

The expert expected that the devaluation of the dinar will become more severe against the euro to reach 150 dinars per euro by the end of the current year, which he described as a dangerous indicator, and the government will have to retract the dollar exchange rate set by 2016 through the Finance Law at 108 dinars, where the dollar will rise more against the dinar , and this tenuous fact will be duly translated through the Finance Act of 2018, which is slated to be released next month.

He further asserted that the Governor of the Bank of Algeria has the authority to reduce the dinar, and to intervene in the regulation of the cash market, in coordination with financial institutions and commercial banks .

The same expert  explained that the aim of this reduction is to raise brand-new dinars in the public treasury to address the gross deficit recorded at all levels, and to muster financial packages so as to fill the financial gaps resulting from the decline in exchange reserves and the steep erosion of funds so as to control revenues owing to the scathing collapse of the price of oil on the world market since mid 2014.

“This adverse financial juncture is not promising today, and in the medium term it will pose great risks to the national economy, even if such remedial measures enforced today contribute to securing additional liquidities”, he underlined.

It should be noted that the national currency the dinar has been plummeting significantly since last July after witnessing a relative stability for 13 months and specifically from the month of June 2016, where the dollar was fixed at the level of 108 dinars, while the euro did not exceed 122 dinars at that time.

 The value of the European single currency is now 20 percent higher within 90 days.

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