| The ariary has been gaining value on the MID for three months. |
The ariary appreciates against the euro and the dollar on the currency market. According to the Ministry of Economy and Finance, the repatriation of currencies has something to do with it.
The latest news is that the ariary is recovering from its agony at the start of the year. The Ministry of Economy and Finance announces renewed vitality of the ariary compared to the euro and the dollar on the currency market. According to the central bank’s latest operation, completed yesterday, the euro is now trading at 4,684.35 ariary compared to nearly five thousand ariary at the start of the year. This is a gain of 225 points in the space of three months. Ditto for the dollar which is purchased at 4,320 ariary against 4,574.21 ariary at the start of the year, a gain of 254 points. Foreign currency prices continue to fall in favor of the ariary.
Different reasons can explain this renewed vitality. According to the economist specializing in finance, Fidèle Randriamananjara, the country is currently in a cycle where imports are considerably reduced. Vital imports like rice have seen their import volumes decline since the last quarter of last year. “Transactions relating to the importation of different products are already completed two or three months in advance. For example, we anticipate the end of the lean season to reduce imports of certain varieties of rice and promote local rice. We are currently in a phase during which imports are gradually decreasing,” he confides.
Renewed vitality
The Ministry of Economy and Finance, for its part, explains this performance which it considers “encouraging” by the repatriation and sale of foreign currencies “which contributed significantly to the appreciation and stabilization of the ariary […] At the same time, formal exports of products from different sectors (mining, agricultural, artisanal) will contribute to further increasing foreign exchange supplies, and supporting this remarkable performance of the ariary,” notes the department. Other avenues can also explain this renewed vitality. Foreign exchange generated by the recovery and tourist flows. There is also the arrival of funds allocated to public investment projects. They are paid in dollars or euros. When all these currencies are collected, the ariary rises in value on the currency market.
The effects of this recovery of the ariary can have repercussions on the macroeconomic level. Inflation still tends to increase. In the short term, the effects of this rise in the value of the national currency are imperceptible. “However, if we follow this trend on a projection, inflation will tend to decelerate, even if only by an inch,” says Fidèle Randriamananjara. Prices will rise less quickly. “When the ariary catches its breath, the same goes for the trade balance. This will also have repercussions on the balance of payments,” continues our interlocutor.
However, in a floating context, the interbank currency market and its trends must reflect the national economy as a whole. For the moment, our economy depends on imports, especially in the field of energy, with petroleum products, but also agri-food and other daily consumer products.
Itamara Randriamamonjy