The euro–dollar rate doubles the currency risk borne by franc-zone cotton producers.

Evidence

The international price of primary products is often fixed in dollars, which remains the main currency used in international trade. This is the case with cotton. But its price in dollars varies as much as the euro–dollar exchange rate. Consequently, the cotton producers of the franc zone can lose out twice: when the price of cotton in dollars falls and when the euro appreciates against the dollar. To understand why an appreciation of the euro implies a decrease in the value of the dollar in CFA francs, let’s take an example. Suppose that 1 euro is exchanged for 1 dollar: based on this parity, 10 dollars will give 6,559.57 CFA francs (since 1 dollar = 1 euro = 655.957 CFA francs). Suppose now that the euro appreciates and that 1 euro is now exchanged for 2 dollars: this is equivalent to 1 dollar = 327.98 CFA francs; therefore, the equivalent of 10 dollars in CFA is now 3,279.8 CFA francs, a reduction that reflects the evolution of the euro–dollar exchange rate. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 642 (#corroborates, via linked claim)

In Burkina Faso, while cotton production had increased six-fold between 1994 and 2006, the sharp appreciation of the euro between 2004 and 2007, in a context of falling prices, was catastrophic. With a parity of 1.2 for a euro, the trading companies and farmers of Burkina Faso could have repaid their costs. But since the euro was trading at 1.3, they suffered serious losses. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 303 (#exemplifies, via linked claim)

African leaders cannot continue to entrust the monetary destiny of their states to the French government, ignoring the dangers of such an approach. This is especially in light of the fact that the fate of the euro itself is uncertain and that economic and financial warfare – both between rich countries, as well as between rich countries and those emerging countries that demand a greater role on the global stage – has now become as destabilising as ‘conventional’ warfare. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 363 (#expands, via linked claim)

Categorization

• XREF: connects to: Euro appreciation against the dollar penalizes franc zone cotton exporters twice — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 642; The euro’s uncertain fate makes French monetary tutelage an added risk. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 363; A ten-cent euro appreciation pushed Burkinabè cotton farmers from profit into losses — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 303

Related

• Euro appreciation against the dollar penalizes franc zone cotton exporters twice (similarity 0.93)
• A ten-cent euro appreciation pushed Burkinabè cotton farmers from profit into losses (similarity 0.92)
• The same strong euro that hurts France devastates African export competitiveness (similarity 0.88)
• Euro appreciation deteriorates franc zone trade balances (similarity 0.85)
• The euro’s uncertain fate makes French monetary tutelage an added risk. (similarity 0.85)
• France avoided needing dollars to buy from CFA-zone countries. (similarity 0.82)
• Free trade agreements would doubly penalize franc zone producers. (similarity 0.80)
• An overvalued CFA franc penalised African exports while favouring imports from France (similarity 0.80)
• CFA ‘stability’ masks currency fluctuation against dollar and pound (similarity 0.80)
• A strong euro penalizes French exports far more than German ones (similarity 0.80)
• Monopsony and export duties drove African crop prices artificially low (similarity 0.80)
• Franc zone dollar receipts must pass through Paris; non-franc zone countries skip this step (similarity 0.79)
• Euro pegging diverts trade toward France and blocks local industrialization. (similarity 0.79)
• The CFA franc was deliberately overvalued against the metropolitan franc. (similarity 0.79)
• Demographic reversal will erode France’s capacity to underwrite franc zone currencies (similarity 0.79)

Broader Connections

• Euro appreciation against the dollar penalizes franc zone cotton exporters twice #corroborates (0.90) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 642
• A ten-cent euro appreciation pushed Burkinabè cotton farmers from profit into losses #exemplifies (0.80) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 303
• The euro’s uncertain fate makes French monetary tutelage an added risk. #expands (0.55) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 363