Abstract:
The exchange rate is considered as a sensitive variable in any economy because of the
different aspects it affects the economy with. This study aims to show the relationship
between the fluctuations of the EUR/DZD and USD/DZD exchange rates, foreign transactions
and foreign exchange returns in commercial banks. This study aims to show as well how
banks deal with foreign exchange risk resulting from exchange rates fluctuations. We will
focus on the Algerian Exterior Bank during the period 2011-2016 which was marked by a
huge and constant decrease in value of the Algerian dinar. The results show that there is a
strong linear relation between the fluctuations of the exchange rates and the foreign exchange
returns, while there is no linear relation between the volume of foreign transactions and
exchange rates fluctuations.
