Algeria has recently imposed a new regulation limiting the amount of foreign currency travelers can carry out of the country to 7,500 euros per year. This measure, introduced on November 21, was expected to curb currency outflows and stabilize the exchange rates of major currencies in the country’s notorious black market. However, initial results suggest the opposite.

A Market Defying Expectations

Despite the announcement, the black market exchange rates for the euro and dollar continue to fluctuate unpredictably. After a brief decline last week, the euro and the US dollar have once again surged, indicating that the market remains as volatile as ever.

• On November 23, the euro climbed to 259 dinars, nearing its all-time high of 260 dinars reached earlier in September.

• However, by November 25, it saw a sharp decline to 253 dinars, a 6-dinar drop in just two days.

• Fast forward to December 1, and the euro has risen again to 258.5 dinars, while the dollar reached a record high of 245 dinars.

These fluctuations underscore the inability of new regulations to exert a lasting influence on Algeria’s parallel currency market.

A History of Ineffectiveness

This isn’t the first time government measures have fallen short. Last October, expectations of a significant dip in foreign currency rates arose after authorities suspended the import of used vehicles (less than three years old). Yet, no substantial change occurred. Similarly, the recent restriction on currency exports appears to have had minimal impact.

Djilali Soufiane, president of the Jil Jadid political party, issued a critical analysis on November 27, arguing that the new measure could backfire. He suggested that limiting currency exports might drive individuals to acquire foreign currency outside official channels or hoard it domestically. According to Soufiane, this would exacerbate the very problems the policy aims to solve.

The Black Market’s Persistent Resilience

The parallel market for foreign currency in Algeria has long operated independently of official policies, driven by strong demand and limited legal alternatives. The latest exchange rates highlight this resilience:

• 100 euros now costs 25,850 dinars.

• 100 dollars has reached an unprecedented 24,500 dinars.

These numbers reflect both the limited supply of foreign currency and the continued reliance on the black market for financial security among Algerians.

The Road Ahead

As the dinar remains under pressure and the black market thrives, Algeria faces a significant challenge in regulating currency flows. Without broader economic reforms or viable legal alternatives to the parallel market, the effectiveness of piecemeal measures like the 7,500-euro cap remains doubtful.

For now, Algeria’s currency market remains a battleground between policy intentions and the realities of a deeply entrenched parallel economy. Whether the government can find a sustainable solution remains to be seen.