Country Report Benin April 2008

Outlook for 2008-09: Exchange rates

The CFA franc is pegged to the euro at a rate of CFAfr655.96:EUR1 and trades against the US dollar in line with the US$:EUR exchange rate. We currently forecast that the CFA franc will strengthen to an average of CFAfr450:US$1 in 2008, its highest level since devaluation in 1994, in line with the weakness of the US dollar against the euro. However, we expect the US dollar to begin to recover in 2009 and the exchange rate to drop back to CFAfr494:US$1. The French Treasury will continue to guarantee the CFA franc, which limits the risk of volatility.

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