The ariary continues its depreciation against the euro and the dollar

Mis à jour le 21 May 2026

A continued depreciation of the ariary against the euro and the dollar poses a threat to the Malagasy economy.

Madagascar’s national currency, the ariary, has been experiencing significant depreciation against major international currencies, particularly the euro and the dollar, for several years. In 2026, this trend intensified, fueling a range of concerns among economic actors and experts, both local and international. According to the interbank market, on Thursday, December 18, the euro was trading at 5,233.05 ariary, while the US dollar reached 4,524.77 ariary. This steady rise in exchange rates illustrates a gradual but certain loss of value for the Malagasy currency, which has concrete implications for the financial stability and purchasing power of the population. The depreciation of the ariary is not limited to short-term fluctuations. It is part of a fundamental dynamic fueled by structural and cyclical factors, accentuated by the global context marked by persistent inflation and global economic instability.It is important to emphasize that this situation did not arise overnight. The continued depreciation of the ariary stems from a number of underlying causes, including weak foreign exchange reserves, low domestic production, and an unfavorable international economic climate. The decline in purchasing power, the increase in the prices of imported goods, and Madagascar’s difficulty in maintaining monetary stability have thus become crucial issues for the country’s economic future. Faced with this reality, a collective mobilization of stakeholders, undoubtedly within the framework of a broad national debate, is necessary to implement effective strategies to counter this trend and stabilize the national currency, a guarantee of sustainable and inclusive growth.Discover the evolution of the depreciation of the Malagasy ariary, its causes, and its economic impacts. Internal and External Factors Explaining the Ariary’s Depreciation in 2026The depreciation of the ariary against the euro and the dollar results from a combination of internal and external factors, reinforcing an already worrying trend. Domestically, Madagascar faces weak local production, a significant budget deficit, and challenges related to insufficient investment in the productive sector. According to economic analyses, Madagascar’s budget deficit reaches approximately 4 trillion ariary, reducing the country’s capacity to support its currency. Simultaneously, increased dependence on imports, particularly energy, raw materials, and consumer goods, exacerbates the pressure on the exchange rate. The trade deficit and the outflow of foreign currency due to massive imports further worsen the situation.

On the international front, the situation is just as unfavorable. The global crisis, persistent inflation in several geographic areas, and dwindling foreign exchange reserves are exacerbating Madagascar’s vulnerability in the currency market. The weakness of the national currency is thus a direct consequence of global trends, where the dollar remains strong against a weakening euro (see market analysis). The single European currency, for its part, is appreciating against the dollar, which directly influences the exchange rate of the Malagasy currency.

Effects of the depreciation of the ariary on the Malagasy economy and population

A currency in continuous depreciation has profound repercussions on the national economy, but also on the daily lives of citizens. The most visible impact concerns the increase in the cost of living, mainly due to the rise in prices of imported goods. Purchasing power stability is eroding, complicating household budget management and hindering domestic consumption. According to a recent study by Madagasikara, inflationary pressure continues to mount, further exposing the population to increased insecurity. Businesses are also feeling the effects of this currency degradation. Many, especially those dependent on imports, are facing soaring production costs, which can lead to higher prices for consumers or reduced profit margins. This situation further weakens an already vulnerable economy, creating a vicious cycle that is difficult to break. The informal sector, in particular, suffers from the lack of currency stability, which fuels poverty and limits long-term economic growth. Political Stakes and Exchange Rate Volatility in 2026The political context in Madagascar in 2026 does not favor lasting monetary stability. The recent period of political tension, marked by conflicts and unrest, temporarily boosted confidence, but the overall trend remains volatile. The EUR/MGA pair showed a slight improvement at the beginning of the quarter, but the rapid decline highlights the fragility of this stabilization. This political and economic instability complicates the implementation of unified measures aimed at sustainably stabilizing the currency.

Exchange rate volatility, exacerbated by the political crisis, also limits the ability of foreign investors to believe in the stability of the Malagasy market. Significant fluctuations, which can reach variations of up to 6% in just a few days, intensify the climate of uncertainty. This situation fuels a vicious cycle where the depreciation of the ariary feeds political instability, and vice versa. The need for a national consensus seems essential to establishing a framework conducive to economic stability, and in particular to controlling the exchange rate.Possible measures to stabilize the ariary against the euro and the dollar in 2026

Furthermore, it is crucial to accelerate structural reforms in the productive sector, particularly by encouraging export diversification and reducing dependence on imports. Promoting new agricultural or industrial sectors, with the support of foreign and local investment, would help reduce foreign currency outflows.

The Malagasy authorities should also strengthen the transparency and credibility of their economic policy to attract more investment, ensuring lasting stability. Establishing a clear regulatory framework for the foreign exchange market would play a decisive role in controlling the exchange rate in 2026. Challenges for Madagascar in managing the depreciation of the ariary in 2026

Despite the various measures mentioned, Madagascar faces several challenges in controlling its currency depreciation. The first remains weak economic governance, which limits the effectiveness of monetary and fiscal policies. A collective commitment, involving all institutions and economic actors, is essential to coordinate efforts.

Furthermore, the extent of the depreciation could amplify macroeconomic imbalances, exacerbating capital flight and increasing inflation. Rigorous management and strong political will will be essential to prevent the erosion of economic stability. The effective implementation of structural reforms, particularly in the financial sector and the fight against corruption, appears vital to restoring confidence in the national currency.

Summary Table of Factors Influencing the Value of the Ariary in 2026

Factors

Description ImpactForeign Exchange Reserves 💼

Low reserve levels, limiting the capacity for monetary support

Increased Depreciation 📉

Local production 🏭

Insufficient industrial diversification

Monetary vulnerability

Economic policies 🔧

How can Madagascar address the challenges of depreciation?

By strengthening economic governance, diversifying its sectors, and promoting transparency and institutional stability, Madagascar will be better able to manage the depreciation of the ariary.