Algerian Dinar Quotation and Foreign Exchange Reserves Outlook by the End of 2024

Algerian Dinar and Forex Reserves Face Headwinds as 2025 Approaches

Algiers – Recent data indicates a complex landscape for Algeria’s currency, the Dinar, and its foreign exchange reserves as the nation nears the end of 2025. The Dinar, a non-convertible currency, experiences fluctuations tied to the performance of global currencies such as the United states dollar, the Euro, the British Pound, and the Japanese Yen, influencing official financial transactions.

Dinar’s Evolution: A Historical Overview

The official exchange rate of the Algerian Dinar has undergone important changes since 1970. In 1970, it stood at 4.94 dinars per one US dollar, gradually increasing to 5.03 Dinars per dollar in 1980. By 2001, the rate reached 77.26 Dinars per dollar and 69.20 Dinars per Euro. Further increases were observed in subsequent years,with the rate reaching 129.4172 Dinars per dollar and 152.1170 Dinars per Euro as of October 1, 2025.

However, a substantial discrepancy exists between the official exchange rate and the parallel market rate. As of October 1, 2025, the parallel market quoted the Dinar at 229 per dollar and 263 per Euro, representing a 77% difference for the dollar and a 65% gap for the Euro compared to official rates. This disparity, which reached nearly 57% in September 2022, highlights challenges in currency management.

Foreign exchange reserves: A declining Trend

Algeria’s foreign exchange reserves, peaking at 194.0 billion dollars in 2013, have been on a downward trajectory. As of the end of 2024, reserves stood at approximately 67.8 billion dollars, according to the International Monetary Fund (IMF), slightly down from 69.825 billion dollars at the end of 2023.Excluding gold reserves, which have remained constant at 173.56 tonnes as 2000, Algeria’s reserves fell to approximately 55 billion dollars by the end of 2024.

Forecasts suggest a potential further decline. An estimated trade deficit of 2.07 billion dollars, coupled with continued service deficits, could reduce reserves to around 41 billion dollars by the end of 2025, excluding gold. though,a potential rise in gold prices could mitigate this decline.

Year	Foreign Exchange Reserves (USD Billions)
2000	11.5
2005	56.2
2010	162.2
2015	144.1
2020	44.2
2023	70
2024 (Estimate)	67.8

Did You Know? Algeria holds approximately 173.56 tonnes of gold, a consistent figure since 2000, which significantly impacts its overall foreign exchange reserve valuation.

Impact of Government Policies

The introduction of a new tourist allowance, setting limits of 750 euros for adults and 300 euros for minors, had a limited impact on curbing the parallel market exchange rate, temporarily preventing a surge to 300 Dinars per Euro.Recent reports have also highlighted concerns over data accuracy within governmental systems, perhaps hindering effective economic planning and forecasting.

Pro Tip: Monitoring the gap between official and parallel market exchange rates is crucial for understanding the real economic pressures and potential risks within Algeria.

Long-Term Economic Implications

The long-term stability of the Algerian Dinar and the adequacy of its foreign exchange reserves depend heavily on diversifying the economy away from hydrocarbon dependence. Structural reforms are pivotal in boosting domestic production and reducing vulnerability to global market fluctuations.A sustained focus on improving data collection and transparency within government institutions is also essential for informed decision-making and fostering investor confidence.

Frequently Asked Questions about The Algerian Dinar

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What is teh projected impact of continued low oil prices on Algeria’s foreign exchange reserves by the end of 2025?

Algerian Dinar Performance Throughout 2024

The Algerian Dinar (DZD) experienced notable volatility throughout 2024, largely influenced by fluctuations in global oil prices and domestic economic policies. As of late October 2024, the official exchange rate remained relatively stable against the US dollar, hovering around 138 DZD/USD. However, the parallel market, or black market, presented a significantly different picture, with rates often exceeding 160 DZD/USD, indicating a ample premium. this disparity highlights ongoing concerns about currency controls and limited access to foreign exchange for businesses and individuals.

* official Rate (Bank of Algeria): Approximately 138 DZD/USD

* Parallel Market Rate: Averaging 160+ DZD/USD

* year-to-Date Depreciation (Official Rate): Approximately 2% (a modest depreciation)

This divergence between official and parallel market rates is a key indicator of underlying economic pressures. The Bank of algeria’s efforts to maintain a stable official rate have involved notable interventions in the foreign exchange market, drawing down on the nation’s foreign exchange reserves.

Foreign Exchange reserves: A Declining Trend

Algeria’s foreign exchange reserves have been on a downward trajectory for several years, and 2024 continued this trend. At the beginning of 2024, reserves stood at approximately $45 billion. By the end of October 2024,they had fallen to around $32 billion.This represents a substantial decrease, raising concerns about Algeria’s ability to finance imports and service its external debt.

The primary drivers of this decline include:

1. Import Financing: Algeria remains heavily reliant on imports, notably for manufactured goods and agricultural products.
2. Oil Price Volatility: While Algeria is a major oil exporter, fluctuating global oil prices impact revenue streams. Lower oil prices directly translate to reduced foreign currency earnings.
3. Currency Interventions: The Bank of Algeria’s consistent interventions to prop up the Dinar deplete reserves.
4. Debt servicing: Algeria has external debt obligations that require foreign currency payments.

Factors Influencing the Dinar’s quotation

Several interconnected factors continue to shape the Algerian Dinar’s quotation and overall stability.Understanding these is crucial for forecasting future trends.

Global Oil Prices

As Algeria’s primary source of export revenue, oil prices exert a dominant influence. A sustained increase in oil prices would bolster Algeria’s foreign exchange earnings and potentially strengthen the Dinar. Conversely, a decline in oil prices would exacerbate existing pressures. Brent Crude benchmarks are particularly relevant for Algerian economic forecasting.

Domestic Economic Policies

The Algerian government’s economic policies, particularly those related to import restrictions and currency controls, play a significant role.Stricter controls can artificially maintain the official exchange rate but also fuel the parallel market and discourage foreign investment. Recent government initiatives aimed at diversifying the economy and attracting foreign direct investment (FDI) are intended to alleviate pressure on the Dinar in the long term.

Inflation and Monetary Policy

Algeria experienced moderate inflation throughout 2024, estimated at around 6%. The Bank of algeria’s monetary policy,including interest rate adjustments,aims to control inflation and stabilize the currency. Though, the effectiveness of these measures is limited by the country’s reliance on imports and the dominance of the oil sector.

Geopolitical Risks

Regional geopolitical instability can also impact the Dinar.Concerns about security in neighboring countries and broader global uncertainties can lead to capital flight and increased demand for foreign currencies.

Impact on Businesses and Individuals

The fluctuating Dinar quotation and declining foreign exchange reserves have significant implications for both businesses and individuals in Algeria.

* Businesses: Companies reliant on imported raw materials or equipment face higher costs due to the weaker Dinar. Access to foreign exchange for import payments can be challenging, leading to delays and disruptions in supply chains.

* Individuals: The rising cost of imported goods contributes to inflationary pressures, eroding purchasing power. Restrictions on foreign currency access limit opportunities for travel and international transactions.

* Investment Climate: The unstable currency habitat discourages foreign investment, hindering economic diversification and growth.

Potential Scenarios for 2025

Predicting the future of the Algerian Dinar is complex, but several scenarios are plausible.

Scenario 1: Continued Decline (Base Case)

If oil prices remain subdued and the government maintains its current economic policies, the Dinar is highly likely to continue depreciating against the US dollar. Foreign exchange reserves will likely fall further, potentially reaching below $30 billion by the end of 2025. The gap between the official and parallel market rates will widen.

Scenario 2: Stabilization (Optimistic Case)

A significant and sustained increase in oil prices,coupled with successful implementation of economic diversification reforms and increased FDI,coudl stabilize the Dinar. The Bank of Algeria might be able to slow the depletion of foreign exchange reserves.

Scenario 3: Devaluation (Pessimistic Case)

If Algeria faces a severe economic shock, such as