Dinar exchange rate depreciates 7.44% against US dollar in 2021

January 3, 2022

TAP) - The dinar exchange rate depreciated 7.44% against the US dollar in 2021 while appreciating 1.4% against the euro, the balance sheet published by the stock exchange market. revrealed.

''This evolution is partly due to the relative stability in net foreign currency holdings which reached 23.3 billion dinars (136 days of import) by December 29 against 23.1 billion dinars (162 days of import) by the end of last year, » said the Tunis Stock Exchange.

'The gross domestic product (GDP) is expected to post a growth rate of nearly 3% according to IMF projections after experiencing a sharp decline of 8.8% in 2020. The recovery is closely linked to the pandemic comtainment coupled with the recovery of the world economy, especially the Europe economy upon which Tunisia strongly depends,' further reads the document.

'This gap in growth compared to budget forecasts is the result of COVID-19 waves and beefed up preventive measures during the summer season which heavily impacted labour-intensive services sector, such as tourism '.

'Investor confidence remains low at home and aboad because of political uncertainty, public finance woes, the lack of tax stability as well as the absence of structural reforms'.

External debt accounts for 60 pc of public debt which overall value represents 82.1% of GDP in 2021 (according to the report of the Finance Ministry). 'This makes the economy vulnerable to exogenous shocks, mainly exchange risks related to the strong growth of the external debt. This in addition to financial challenges facing mainly public enterprises which represent another source of concern '.

Inflationary pressures are resurfacing, with their social cost. After 4.9% in 2020, inflation rose to 6.4% in November, fueled by both world price pressures and food price developments.

Social indicators sharply worsened during the crisis. The unemployment rate hit 18.4% of the labour force, according to figures provided by the National Institute of Statistics.

The Central Bank was faced with a delicate situation: a soaring inflation which resulted in negative interest rates starting from H2 of 2021, a direct result of the increase of world energy and food prices, on the one hand, and price adjustments of some local products, on the other.

This situation is combined with the successive downgrades of Tunisia's sovereign rating by Moody's and Fitch.

The very difficult economic, social and political situation affected stock market indices in 2021 at varying degrees, especially in realtion to the volume of transactions and new listings.

However, there were signs of hope in the recovery of the activity of listed companies. Activity indicators of listed companies reported a 13% rise in the overall income during the first 9 months of 2021, reaching 14.4 billion dinars against 12.9 billion dinars in 2020.

Stock exchange activity closed the year on a positive note. Tunindex, the benchmark index of the Tunis Stock Exchange, posted a 2.34% rise after two consecutive drops (-2.06% in 2019 and -3.33% in 2020), closing at 7,046,01 points.

The aggregate amount by by companies listed on and approved by the Financial Market Council (late November 2020) reached 508 million dinars (MD) for 14 operations. This includes 8 bond issues worth 447 MD, a bond issue based on the principles of Islamic Finance worth 10 MD and 5 capital increases worth 51 MD.


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