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Algeria’s black market for foreign currency underlines its economic woes – Halifax.CityNews.ca

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ALGIERS, Algeria (AP) — In a square near the center of Algiers, currency traders carry wads of euros, pounds and dollars, hoping to exchange them to those worried about the plummeting value of the Algerian dinar.

This black market for foreign currencies is among the signs of the economic woes plaguing Algeria. The state, reluctant to allow the exchange rate to adjust fully, has proven incapable of limiting demand among the population as confidence in the dinar remains low.

The widening parallel exchange rate underscores how everyday Algerians have lost buying power as the government has juggled competing priorities, trying to combat inflation and maintain state spending, subsidies and price controls that keep people afloat.

In the oil-rich North African nation, business owners are rumored to be dumping their assets and scrounging up euros on the black market so their wealth isn’t stuck. Middle-class people also rely on euros and dollars to buy things in short supply like medicine, vehicle parts or certain foods.

Last week, the official exchange rate allowed one euro to be sold for 145 Algerian dinar, while on the same day, currency traders were selling one euro for nearly 241 dinars on the black market — 66% higher than the official exchange rate.

Rabah Belamane, a 72-year-old retired teacher from Algiers, told The Associated Press that the official rate is a fiction and that his pension doesn’t go as far as it used to in either dinar or euro.

“The real value of the dinar is on the informal market, not in the bank, which uses an artificial rate to lie to the public,” Belamane said.

Algeria has long been known for having among the region’s most closed economies. It limits the amount of foreign currency its citizens can access to a modest tourism allowance that amounts to less than needed to carry out one of Islam’s pilgrimages to Mecca or visit family in Europe’s large Algerian diaspora.

The government estimates roughly $7 billion worth of foreign currency trades hands on the country’s black market.

From Lebanon to Nigeria, experts warn that having two parallel exchange rates can distort a country’s economy, discourage investment and encourage corruption. Algeria has historically been reluctant to lower the official value of the dinar, worried that devaluation will spike prices and anger the population.

Traders are intimately aware that the gap between the official and black market exchange rate can narrow or widen by the day. They expect it to swing up as Ramadan approaches.

“In recent days, the supply of euros has been lacking, which explains how it has shot up,” trader Nourdine Sadaoui told the AP as he took a pause from yelling “Change!” at people passing by.

That shortage may make purchasing certain goods difficult for Algerians. But some in government believe it reflects the success of import restrictions and laws limiting how many euros can be brought into the country.

Hicham Safar, the head of a finance committee in the lower house of Algeria’s Parliament, said last week that he “welcomed” such concerns. The growing chasm between the official and black market rates meant fewer euros are getting into the country, he said.

“There’s no more overcharging on imports,” he said on television station Echourouk, citing efforts by customs officials to better regulate imports through the Bank of Algeria and minimize the use of foreign currency.

For decades, steady revenue from oil and gas allowed Algeria to import everything from toothpicks to industrial machinery. The country’s large import market concentrated economic power in the hands of a small group of businessmen known to overbill clients and stash profits abroad, including in European and Emirati banks.

Since President Abdelmajid Tebboune took power, the country has targeted the so-called “oligarchs,” including businesses active in imports. Throughout his tenure, the costs of basic goods in Algerian dinars have swung and imports have been further limited.

Algeria emerged as an unexpected beneficiary of the war in Ukraine, as energy prices rose and Europe sought non-Russian suppliers of oil and gas. But the country has experienced food crises and rising anger as the prices of necessities like chicken, cooking oil and legumes have risen.

Economist Karim Allam said the strength of the euro had worked to Algeria’s detriment, cutting into the purchasing power of those who make money in dinars. He is skeptical of the idea that a shortage of foreign currencies reflects the government’s success, but also doubts that business people are fleeing the country in droves or sending money abroad.

“I don’t think they’ll take the risk of smuggling currency out of the country, which is considered an economic crime punishable by 20 years’ imprisonment,” he said.

Regardless, the falling value of the dinar on the black market is one indicator of how Algerians continue to lose purchasing power despite governmental efforts to stabilize the economy while keeping government spending and subsidies high.

“Inflation has destroyed the buying power of Algerians, who are falling into poverty. The dinar has become worthless,” said Belamane, the retired teacher.

The Associated Press

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Business

A timeline of events in the bread price-fixing scandal

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Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

The Canadian Press. All rights reserved.

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Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

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TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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