The Role of the Exchange Rate in Achieving Financial Stability: An Analytical Study of Algeria for the Period 2010–2024

Given the renewed and ongoing importance of the subject of the study and its impact on international economic relations and the local economy alike, the aim was to shed light on the various concepts related to the overall indicators of financial stability and exchange rate systems, and then to demonstrate the extent to which the values of these indicators change in the Algerian economy with changes in the exchange rate during the period under study.The study concluded that a flexible, managed exchange rate system was adopted, which enabled adaptation to global financial and economic fluctuations and contributed to achieving financial stability and a clear and direct impact on some overall financial stability indicators, such as financial reserves, the balance of payments, and inflation, while recording a weak response to other indicators, such as economic growth and external debt.This is due to the rentier nature of the Algerian economy, its heavy dependence on hydrocarbon revenues, its vulnerability to price fluctuations in global markets, and its being the main source of these foreign currency revenues, in light of the significant weakness of the productive apparatus, which pushes us to diversify economic activity and find financing alternatives.