Euro appreciation deteriorates franc zone trade balances

Evidence

Firstly, there is the question of the effects of the changes in the external value of the euro. An appreciation of the euro – that is, an increase in its external value – entails, for the countries of the franc zone, a reduction in the price competitiveness of their manufactured goods and of the equivalent in CFA francs of their export proceeds in dollars. At the same time, it makes their imports cheaper and reduces the weight of their debt in dollars. As a result, it hinders exports and favours imports, which contributes to a deterioration of the trade balance. Since its creation, the euro has often appreciated against the dollar, simultaneously causing an appreciation of CFA francs against the dollar: between October 2000 and mid-July 2008, the euro has cumulatively appreciated by almost 94 per cent against the dollar, according to ECB data. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 299

Categorization

• XREF: connects to: The same strong euro that hurts France devastates African export competitiveness; Demographic reversal will erode France’s capacity to underwrite franc zone currencies; Devaluation and revaluation simply shift the fixed CFA-euro parity — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 122 (+9 more)

Related

• The same strong euro that hurts France devastates African export competitiveness (similarity 0.92)
• Euro appreciation against the dollar penalizes franc zone cotton exporters twice (similarity 0.91)
• Demographic reversal will erode France’s capacity to underwrite franc zone currencies (similarity 0.89)
• An overvalued CFA franc penalised African exports while favouring imports from France (similarity 0.88)
• France’s strong-franc policy transmitted its appreciation shock to the CFA zone (similarity 0.88)
• A strong euro penalizes French exports far more than German ones (similarity 0.87)
• Devaluation and revaluation simply shift the fixed CFA-euro parity (similarity 0.87)
• Euro pegging diverts trade toward France and blocks local industrialization. (similarity 0.86)
• The 1994 devaluation capped decades of Paris refusing to adjust the overvalued CFA franc (similarity 0.85)
• The euro–dollar rate doubles the currency risk borne by franc-zone cotton producers. (similarity 0.85)
• France’s strong-franc policy worsened CFA countries’ competitiveness (similarity 0.85)
• Eurozone membership merged CFA extraction with neoliberal austerity, worsening African prospects. (similarity 0.85)
• An overvalued CFA franc was engineered to reorient colonial trade toward France (similarity 0.85)
• The CFA franc’s fixed peg forced colonies to absorb French devaluations helplessly (similarity 0.84)
• CFA ‘stability’ masks currency fluctuation against dollar and pound (similarity 0.84)

Broader Connections

• Euro appreciation against the dollar penalizes franc zone cotton exporters twice #corroborates (0.80) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 642
• France’s strong-franc policy worsened CFA countries’ competitiveness #expands (0.70)
• The CFA franc’s fixed peg forced colonies to absorb French devaluations helplessly #complicates (0.50)