Algeria's currency hits record low against US dollar

GMT 03:03 2015 Thursday ,20 August

Arab Today, arab today Algeria's currency hits record low against US dollar

Algerian dinar
Algiers - XINHUA

The Algerian dinar has hit a historic low against the U.S. dollar and other currencies, the lowest level ever reached since the country's independence from France in 1962.

The dinar has slumped to 105 to the U.S. dollar, 116 to the euro and 165 to the British sterling.

The decline of the dinar is linked to a couple of international parameters -- the increase of the U.S. dollar and the fall of oil prices in the global market, said economist and Vice President of the National Economic and Social Council (CNES) Mustapha Mekideche.

He explained that Algeria's foreign exchange system stipulates that when the dollar increases and the country's foreign exchange earnings decline, the exchange rate setting process is adjusted to obtain a greater amount of dinars to offer for the state budget.

But, Bachir Messaitfa, economist and former secretary of state for Forward Planning and Statistics, said that the fall of dinar is a deliberate action by the government.

He argued that the government's move to integrate the money circulating in the informal circuit into the banking system is one reason for the devaluation.

Through this measure, Messaitfa said, the government wanted to ensure enough liquidity to banks (about 40 billion U.S. dollars) to redirect them towards productive investment, and ultimately diversify the nation's non-oil economy.

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