The slide of the national currency is accelerating this week, as shown by the weekly quotes communicated yesterday by the Banque d'Algérie. The value of the euro was thus set at 160.07 DA; an all-time low, while the value of the dollar is set at 134.13 DA.

The downward trend of the dinar against the main currencies is confirmed and should continue in the coming months, since the macroeconomic framework of the period 2021-2023 anticipates a sharp devaluation of the dinar against the greenback.

Indeed, the value of the national currency will continue to chain significant bearish movements from 2021, at a rate of 142.20 DA for a dollar on average next year, 149.31 dinars / dollar in 2022 and 156.78 dinars / dollar in 2023.

Since the beginning of June, the dinar has lost more than 6% of its value against the single European currency. Over the same period, the dollar-dinar parity was stable; the greenback trading against 134.40 in the second week of June 2020 against 134.13 this week.

The devaluation of the dinar is more pronounced against the main currency of the Old Continent, since one euro was worth 150.56 DA during the second week of last June, against a low of 160.07 DA this week, marking a decline of 10 DA in a period of only five months.

A devaluation of this magnitude is difficult to explain solely the factor related to the variation in the exchange rates of the main currencies on the international foreign exchange markets. It is therefore also necessary to look at the fundamentals of the national economy (oil price, inflation differential, public expenditure), the evolution of which explains, in part, the devaluation of the dinar against the euro and the dollar.

A downward trend has been initiated by the dinar since the beginning of the current year, while the price of Brent has fallen since January, reaching $16 a barrel last April. While revenues were falling as a result of falling oil prices, public spending was on the rise, further weakening the country's internal and external financial positions.

The evolution of the fundamentals of the national economy thus partly reflects the downward movement in the value of the dinar. Moreover, the Central Bank assumed without the slightest detour the fact that the dinar exchange rate played to a large extent its role as a buffer of external shocks.

"In order to prevent any appreciation of the real effective exchange rate that is harmful to macroeconomic stability in the medium term, the relative flexibility of the dinar rate on the interbank foreign exchange market makes it possible to absorb, in part, the effect of the fall in oil prices.

The interventions of the Bank of Algeria on this market are part of this strategic objective", stressed the Central Bank in its latest economic notes.

But recently, this institution warned that exchange rate adjustment "must not be the main, if not the only lever for macroeconomic adjustment" and called for the implementation of structural reforms in order to restore macroeconomic balances in the long term.