We forecast that the Tunisian dinar will weaken slightly against the US dollar in 2011, as protests disrupt exports and FDI, putting pressure on the currency. We expect the interim government to follow through on plans to liberalise the dinar, but we now believe that full liberalisation will occur only after the forecast period. Initially, the Tunisian dinar will remain pegged to a basket of currencies, of which the euro accounts for around two-thirds. The EU has said that it aims to finalise negotiations on Tunisia's advanced status application by July, which will grant it preferential trade terms. Full currency convertibility will require major reforms to the banking sector. In the interim period, the BCT will take a more flexible approach to exchange-rate management, reducing its interventions in the foreign-exchange market. We expect the dinar to weaken against the dollar but to strengthen against the euro in 2011, after which it will appreciate for the remainder of the forecast period. The average rate of the dinar is forecast to appreciate to TD1.81:EUR1 in 2011 and to reach TD1.63:EUR1 in 2015. We expect a depreciation against the dollar, to TD1.45:US$1 in 2011, after which the dinar will strengthen to TD1.39:US$1 in 2015.