The governor of the Bank of Algeria Rostom Fadhli on Tuesday unveiled the figures for inflation, bank liquidity and the evolution of the dinar against the main currencies, the euro and the dollar.
Figures which illustrate the precarious situation of the Algerian economy and the weakening of the purchasing power of households, hard hit by inflation which has literally exploded in one year.
According to Rostom Fadhli, headline inflation accelerated from 5.96% in one year to reach 9.2% in October 2021 compared to the same month of the previous year. This explosion in inflation reflects the rise in food prices, Fadhel said during a meeting between the Bank of Algeria and banks and financial institutions, according to the official agency report.
During this period, food prices have logically increased sharply, further weakening the purchasing power of Algerians. Thus, this increase went from 1.8% in October 2020 to 14.4% in October 2021, due to the sharp increase in the prices of fresh agricultural products which jumped by 16.5% in October 2021 against only 1, 9% in the same month of 2020, according to the same source.
The dinar in free fall
In fact, everything has almost increased in 2021. The prices of manufactured goods have evolved by 6.2%, those of services by 2.3% in October 2021 against 0.7% in the same month of 2020.
Another sign of the poor health of the Algerian economy: the depreciation of the dinar which inexorably continues its upward curve against the main currencies: dollar and euro. During the first eleven months of 2021, the Algerian dinar again lost ground (6.2%) against the greenback. The dollar went from 126.36 dinars to 134.7387 dinars during this period, according to the governor of the Bank of Algeria.
Mr. Fadhli explained that the evolution of the Algerian dinar remains strongly correlated with the evolution of the economic fundamentals and with the fluctuations of the main reserve currencies on the international exchange markets.
Between the end of November and the end of November 2021, the dinar fell 6.86% against the dollar. Thus the greenback went from 129.13 dinars to 138.6286 dinars. From the end of 2020 to the end of November 2021, the national currency lost 4.69% against the US dollar.
Against the euro, the decline of the dinar was more significant (10.38%) during the first eleven months of 2021 compared to the same period of 2020. The single currency fell from 143.42 dinars to 160.02 dinars in eleven months.
The level of overall bank liquidity improved significantly from last October after contracting following the economic repercussions of the health crisis, the governor of the Bank of Algeria, Rostom Fadhli, said in Algiers on Tuesday.
The overall liquidity of banks, it has improved markedly. From 632.3 billion dinars at the end of December 2020, it rose to 1,485.6 billion dinars at the end of November 2021, according to Mr. Fadhli.
The increase in bank liquidity was achieved thanks to “monetary policies decided by the Bank of Algeria in terms of lowering the rate of minimum reserves”, he explained.
This rate was reduced to 2% on February 15. On March 15, 2020, this rate was lowered from 10% to 8%, before being set at 3% in September 2020.
Mr. Fadhli indicated that the Bank of Algeria proceeded to increase the refinancing thresholds of negotiable public securities, to the extension of the duration of the refinancing from seven days to one month and to the total satisfaction of the requests for refinancing. banks.
He recalled that the Bank of Algeria launched last July a special refinancing program amounting to 2,100 billion dinars, for a period of one year.
