The management of foreign exchange reserves in Algeria

Abstract EN

Foreign exchange reserves have long been a very important part of the international monetary system.

These reserves have developed drastically, especially in recent years.

In the second quarter of 2019, the amount of reserves in the world exceeded 11730 billions American Dollars.

In Algeria, foreign exchange reserves have also grown significantly in recent years due to the rise in oil prices in the world market.

Reserves reached a peak in 2013 with 194.012 billions Dollars.

After the fall in oil prices in June 2014, reserves decreased to approximately 73 billions Dollars in the first quarter of 2019.

Today, the priority is not the accumulation of reserves, but their management policies.

In this paper, the policy of foreign exchange reserves management in Algeria will be studied.

For this purpose, we will proceed by a theoretical approach of the concepts and models of foreign exchange reserves management and a descriptive analysis, using figures and then identify the shortcomings of this management policy.

As a result, Algeria has always opted for prudent reserves management and a preference for the dollar as a reserve currency followed by the euro.

On the other hand, it has allowed the prepayment of external debts and created the Income Regulation Fund (IRF).

Therefore, investing part of these reserves in a sovereign investment fund, in medium-risk securities, and in financing of domestic investments in order to boost the local economy with transparent management could constitute interesting alternative or complementary ways.