Navigating Currency Fluctuations: A Look at CEMAC’s Economic Resilience

Despite recent depreciation of the FCFA against major global currencies, including the US dollar, British pound, Chinese yuan, and Euro, Central African Economic and Monetary Community (CEMAC) nations are demonstrating surprising economic resilience. According too the latest monetary policy report from the Bank of Central African States (BEAC), these nations have actually improved their competitive standing in international markets.

Understanding the Real Effective Exchange Rate (TCER)

The key to understanding this apparent paradox lies in the Real Effective Exchange Rate (TCER). The TCER,a measure of price competitiveness,has depreciated,signaling a gain in competitive positions for CEMAC economies in the global marketplace. Specifically, the global TCER registered a 1.4% increase in the fourth quarter of 2024, following a similar increase in the preceding quarter.

The actual effective (TCER) (TCER) CEMAC (TCER),measuring the competitiveness-price,has depreciated,indicating a gain in competitive positions in the international markets compared to the previous quarter.

Bank of Central African states (BEAC) Monetary Policy report

Drivers of Improved Competitiveness

This improved competitiveness is attributed to advancements on both the import and export fronts,each experiencing a 1.4% improvement during the analyzed period. This suggests that CEMAC nations are becoming more attractive trading partners, both for those seeking to import goods and services and for those looking to export to the region.

Inflation Advantage: A Key Differentiator

Crucially, the TCER remained below the nominal effective exchange rate (TCEN), reflecting a favorable inflation rate differential compared to CEMAC’s primary trading partners. This means that while the FCFA’s nominal value may have decreased against other currencies, the relative cost of goods and services within the CEMAC region has remained competitive due to lower inflation.

On average, inflation rates in the sub-region are low, compared to business partners. Thus, in quarterly variation, the CEMAC inflation rate increased by 0.1 % in the fourth quarter of 2024,against an increase of 1.2 % on average in partner countries.

Bank of Central African States (BEAC) Monetary Policy Report

To put this into viewpoint, consider that while many developed nations are grappling with inflation rates hovering around 2-3% (cite: IMF World Economic Outlook, April 2025), CEMAC nations have managed to maintain significantly lower rates. This provides a distinct advantage in terms of price competitiveness.

Implications and Future Outlook

While the FCFA depreciation presents challenges, the CEMAC region’s ability to leverage lower inflation and improve its TCER demonstrates a degree of economic agility. This suggests that CEMAC nations are well-positioned to capitalize on global trade opportunities,despite currency fluctuations. Though, continued monitoring of inflation rates and proactive economic policies will be crucial to sustaining this competitive edge in the long term.