The CAR is part of the Central African Monetary and Economic Union (Communaute Economiquareue et Monetaire de l'Afrique Centrale, or CEMAC), a group of 5 francophone countries that use the same currency, the CFA franc. The CFA franc is tied to the French franc and can be readily exchanged at 50 CFA francs to 1 French franc. The CAR, like all members of the CFA franc communities, has benefited from this stable currency.
As a member of the CFA zone, the CAR was profoundly affected by the 50 percent devaluation of the CFA in 1994. This had some positive short-term effects, though, in promoting exports of diamonds, timber and
|Exchange rates: Central African Republic|
|Communaute Financiere Africaine francs (CFA Fr) per US$1|
|Note: From January 1, 1999, the CFA Fr is pegged to the euro at a rate of 655.957 CFA Fr per euro.|
|SOURCE : CIA World Factbook 2001 [ONLINE].|
cotton because it doubled the value of these exports in CFA francs, boosting revenue. The devaluation caused a temporary rise in inflation and lowered living standards temporarily and probably increased poverty by raising prices while most salaries remained static.
In the long term, results were more mixed. The de-valuation made imported products relatively more expensive. One of the most significant price increases was of petrol, which was priced beyond the reach of many and severely curbed the use of petrol-powered transport, effectively stopping bus service, for example.