Devaluation of franc CFA: French authorities dispel rumors But Africans ague that before the first devaluation in 1994, authorities had sworn that it will not occur
Though persistent tales have been making the rounds in diplomatic and financial circles that the franc CFA, pegged to the euro and assured by the French treasury, will be devalued by as much as 50 percent, meaning dropping its worth by half, various French authorities however, dispelled these rumors and assured worried Africans at a meeting of finance ministers of the franc zone in Paris recently that the franc CFA, first devalued in 1994, will not be devalued over again.The governor of the bank of France, Christian Noyer, said he was not in favor of devaluation because this course of action would be counter-productive. His views were supported by the director of the French treasury, Xavier Musca, who further assured that there will be no devaluation of the franc CFA because no African finance Minster had expressed that wish. He made it clear that the French were not hot about devaluation, but if Africans wanted it, then they will go along with the decision. For their part, the director of the Bank of Central African States (BEAC), Philibert Andzembe, and his colleague of the Bank of West African States (BCEAO), Justin Baro, both said the Paris meeting did not even try out the subject of another devaluation of the franc CFA, and that it was out of question. It should be noted here that rumors of the devaluation of the franc CFA follow the protracted depreciation of the dollar against the euro to which the franc CFA is pegged. This has made the franc CFA less competitive in the international market. However, the Paris declarations were not as reassuring as they could be following what happened on the eve of the 11 January 1994 devaluation of the franc CFA. Months before it happened, rumors had been rife that the CFA was going to be devalued. But African Finance ministers, the directors of BEAC and BCEAO as well as French authorities vowed that the devaluation would not happen. But franc zone inhabitants woke up on 11 January 1994 to realize that their currency had been devalued by 50 percent. Thus the prices of imported goods automatically doubled leading to wide spread hunger and malnutrition. Many are those who strongly believe that in a zone where most manufactured goods are imported, devaluation will be very hard on various Countries in the zone.
Courtesy - Harry Ndienla Yemti
Though persistent tales have been making the rounds in diplomatic and financial circles that the franc CFA, pegged to the euro and assured by the French treasury, will be devalued by as much as 50 percent, meaning dropping its worth by half, various French authorities however, dispelled these rumors and assured worried Africans at a meeting of finance ministers of the franc zone in Paris recently that the franc CFA, first devalued in 1994, will not be devalued over again.The governor of the bank of France, Christian Noyer, said he was not in favor of devaluation because this course of action would be counter-productive. His views were supported by the director of the French treasury, Xavier Musca, who further assured that there will be no devaluation of the franc CFA because no African finance Minster had expressed that wish. He made it clear that the French were not hot about devaluation, but if Africans wanted it, then they will go along with the decision. For their part, the director of the Bank of Central African States (BEAC), Philibert Andzembe, and his colleague of the Bank of West African States (BCEAO), Justin Baro, both said the Paris meeting did not even try out the subject of another devaluation of the franc CFA, and that it was out of question. It should be noted here that rumors of the devaluation of the franc CFA follow the protracted depreciation of the dollar against the euro to which the franc CFA is pegged. This has made the franc CFA less competitive in the international market. However, the Paris declarations were not as reassuring as they could be following what happened on the eve of the 11 January 1994 devaluation of the franc CFA. Months before it happened, rumors had been rife that the CFA was going to be devalued. But African Finance ministers, the directors of BEAC and BCEAO as well as French authorities vowed that the devaluation would not happen. But franc zone inhabitants woke up on 11 January 1994 to realize that their currency had been devalued by 50 percent. Thus the prices of imported goods automatically doubled leading to wide spread hunger and malnutrition. Many are those who strongly believe that in a zone where most manufactured goods are imported, devaluation will be very hard on various Countries in the zone.
Courtesy - Harry Ndienla Yemti
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