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Algeria
Currency and Exchange Rates
Algeria
Currency and Exchange Rates
The Central Bank set the daily price of the Algerian dinar,
keyed to a basket of currencies most widely used in payment for
exports but primarily linked to the United States dollar and the
French franc. The dinar has had a long history of being
overvalued, resulting in a runaway black market on which the
dinar was traded at several times the official rate for many
years. In a serious attempt to bring down black-market rates and
thus achieve convertibility for the dinar, the government decreed
a major devaluation in mid-1990 and allowed the dinar to drop
about 52 percent, from DA8.5=US$1 in July of that year to
DA16.6=US$1 in March 1991. Although this step helped the
authorities meet IMF demands for reaching a new standby
agreement, they were concerned about the raised price of imported
consumer products and the potential social implications for the
poorer majority of the population. The considerable gap between
prices and economic costs for certain essential commodities, such
as energy products, prompted the government to institute a policy
of gradually reducing consumer subsidies while recognizing the
importance of price supports in protecting the most disadvantaged
people. Whereas the government tempered its policy of moving
rapidly to a system in which almost all prices were to be
determined by market forces, in 1991 it adjusted the prices of
subsidized products, electricity, natural gas, and petroleum
products. These steps resulted in reducing total 1991 subsidies
by DA9.6 billion.
Data as of December 1993
