Definition
The CFA franc is a collective name for two distinct African currencies that share the same value and structure but operate in separate regions. The West African CFA franc (XOF) circulates in eight countries including Senegal and Côte d'Ivoire, while the Central African CFA franc (XAF) serves six nations including Cameroon and Gabon.
Despite having identical exchange rates, these currencies cannot be used interchangeably across regions. Both are pegged to the euro at a fixed rate of 655.957 CFA francs per euro, providing stability but limiting independent monetary policy. The French Treasury guarantees their convertibility, and France maintains involvement in their management through technical cooperation with the issuing central banks. Traders in Côte d'Ivoire have access to various trading platforms that support XOF currency pairs for forex market participation.
In short: Two regional African currencies (XOF and XAF) with fixed euro pegs, shared value, but separate geographic circulation zones and central banks.
Example in Action
Consider a textile importer in Dakar, Senegal, who purchases fabric from a supplier in Douala, Cameroon.
The Senegalese trader uses XOF, while the Cameroonian supplier uses XAF.
Both currencies share the same value at 655.957 per euro, but they're not interchangeable.
The importer can't simply hand over XOF bills. Banks must convert between the two, adding processing time and fees despite the identical exchange rate.
Senegalese traders navigating these cross-border transactions should understand the regulatory frameworks that govern forex operations in their market.
Why It Matters
Currency pegs don't exist in a vacuum—they reshape entire economies and political landscapes. The CFA franc‘s fixed rate keeps inflation low but limits how African central banks can respond to local crises. France still holds influence over monetary policy, sparking protests across the zone.
Recent coups in five franc countries partly stem from anger over this arrangement. ECOWAS now plans a new “eco” currency by 2027. Regional bodies like BCEAO and CREPMF oversee both foreign exchange operations and securities markets to maintain stability within the monetary union.
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