Recherchers economiques manageriales
Volume 14, Numéro 4, Pages 423-446
2020-06-30

Measuring Algeria’s Real Effective Exchange Rate A Study (2010-2017)

Authors : Drareni Nasser .

Abstract

The effective exchange rates (EERs) are indicators of the purchasing power of currencies and, when properly deflated, their change is an indicator of developments in the external competitiveness of the economy. These indexes are typically used to describe monetary and financial conditions in an economy and as a measure of a country’s external competitiveness. Algeria’s international competitiveness has received increasing attention in recent years as exports have fallen small of expectations and Algeria has lost market share despite the weak of the Algerian dinar (DZD). Different Algerian real effective exchange rates (AREER8-13-19) measures and types are useful for different purposes. The results for all three AREER8-13-19 indexes showed that for the period under review 2010-2017 a real depreciation in the narrow group by 3.02%, in the major group 3.15% and in the broad group 2.33% and in nominal by 21.8% in the narrow group, 22.18% in the major group and 19.66% in the broad group respectively. A depreciation of the currency is understood to signify a gain in the competitiveness of the country’s external sector.

Keywords

Effective exchange rates, Nominal effective exchange rate, Real effective exchange rate, Effective exchange rates for Algerian dinar.