For a decade, the CFA franc has been one of Africa’s more stable currencies. The West African CFA franc and the Central African CFA franc are currently used by 12 former French colonies in the region (as well as Guinea-Bissau and Equatorial Guinea). They are pegged to the euro and backed by the French treasury, which means these economies have not experienced the same volatility seen in other markets like South Africa and Nigeria.
However, the upcoming French presidential election – and, more precisely, a potential win by the far-right candidate Marine Le Pen – places the CFA franc at risk. Le Pen has promised to pull France from the eurozone if she wins – and although recent polls suggest this is unlikely, similar polls have been proven unreliable in predicting Britain’s vote to exit the EU and Trump’s US presidential win.
So what would it mean for the CFA franc if France withdraws from the euro?
Read the full article at How We Made It In Africa