Analysis of the Dynamics of the Algerian Dinar Exchange Rate Using Wavelet Analysis

Abstract

Wavelet analysis revealed that fluctuations in the Algerian dinar's exchange rate are not random but reflect the impact of macroeconomic factors over the long, medium, and short terms. The exchange rate is closely linked to oil price cycles, with increases leading to stability and declines causing depreciation. The results also confirm the influence of internal factors, such as inflation and monetary policies, as well as external shocks like global financial crises. The hypotheses were validated, showing that central bank interventions, including foreign reserve management and partial floating policies, played a key role in shaping exchange rate behavior. Achieving long-term stability requires economic diversification and strengthening monetary policy to mitigate volatility.