Identifier
Created
Classification
Origin
09CONAKRY566
2009-09-16 12:06:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Conakry
Cable title:
CNDD PLANS TO FIX FOREIGN EXHANGE RATE
how-toVZCZCXRO6947 RR RUEHMA RUEHPA DE RUEHRY #0566 2591206 ZNR UUUUU ZZH R 161206Z SEP 09 FM AMEMBASSY CONAKRY TO RUEHC/SECSTATE WASHDC 4050 INFO RUEHZK/ECOWAS COLLECTIVE RUEATRS/DEPT OF TREASURY WASHINGTON DC RUEAIIA/CIA WASHDC RHEFDIA/DIA WASHINGTON DC RHMFISS/HQ USAFRICOM STUTTGART GE
UNCLAS CONAKRY 000566
SIPDIS
SENSITIVE
E.O. 12958: N/A
TAGS: EFIN ECON PGOV PREL GV
SUBJECT: CNDD PLANS TO FIX FOREIGN EXHANGE RATE
UNCLAS CONAKRY 000566
SIPDIS
SENSITIVE
E.O. 12958: N/A
TAGS: EFIN ECON PGOV PREL GV
SUBJECT: CNDD PLANS TO FIX FOREIGN EXHANGE RATE
1. (U) An Interministerial Commission which includes; the
Ministries of Defense, Finance, Commerce, Mines, Justice,
High Crimes and Banditry, the Central Bank, and the Office of
the President, have reportedly proposed to peg the Guinean
Franc to the US dollar. The new exchange rate would be
valued at 4800 Guinean Franc (GNF) to the dollar. The
current floating exchange rate has been hovering around 4900
GF. According to sources, the CNDD plans to initiate this
exchange rate peg in order to renew confidence in the
weakening Guinean currency. A similar initiative was
considered in June 2009 (reftel) but never came to fruition.
At that time, the proposed rate was 3500 GF to the dollar,
an amount that caused consternation among the business
community and the foreign exchange commission.
--------------
COMMENTS
--------------
2. (SBU) The government,s attempt to set the rate may be an
ill-advised attempt to improve confidence in Guinea,s
economy. The GoG does not have sufficient foreign exchange
reserves to effectively guarantee the exchange rate. The
population may turn to the black market, to exchange foreign
currency. The speculative informal market is already
creating a parallel exchange rate at the current value of
5800 GF to the dollar. Coupled with the practice of
conducting business using a much more fluid system of
connections and influence, the effort could serve to further
damage an already suffering economy.
END COMMENT.
BROKENSHIRE
SIPDIS
SENSITIVE
E.O. 12958: N/A
TAGS: EFIN ECON PGOV PREL GV
SUBJECT: CNDD PLANS TO FIX FOREIGN EXHANGE RATE
1. (U) An Interministerial Commission which includes; the
Ministries of Defense, Finance, Commerce, Mines, Justice,
High Crimes and Banditry, the Central Bank, and the Office of
the President, have reportedly proposed to peg the Guinean
Franc to the US dollar. The new exchange rate would be
valued at 4800 Guinean Franc (GNF) to the dollar. The
current floating exchange rate has been hovering around 4900
GF. According to sources, the CNDD plans to initiate this
exchange rate peg in order to renew confidence in the
weakening Guinean currency. A similar initiative was
considered in June 2009 (reftel) but never came to fruition.
At that time, the proposed rate was 3500 GF to the dollar,
an amount that caused consternation among the business
community and the foreign exchange commission.
--------------
COMMENTS
--------------
2. (SBU) The government,s attempt to set the rate may be an
ill-advised attempt to improve confidence in Guinea,s
economy. The GoG does not have sufficient foreign exchange
reserves to effectively guarantee the exchange rate. The
population may turn to the black market, to exchange foreign
currency. The speculative informal market is already
creating a parallel exchange rate at the current value of
5800 GF to the dollar. Coupled with the practice of
conducting business using a much more fluid system of
connections and influence, the effort could serve to further
damage an already suffering economy.
END COMMENT.
BROKENSHIRE