CFA Franc Zone Membership and Exchange Rate Variability

This paper investigates the variability of nominal and real exchange rates of the members of the CFA Franc Zone by comparing it with those of other African countries. The study draws three conclusions. First, both nominal and real exchange rate variability increased during the flexible exchange rate period for all countries. Second, Zone members experienced lower nominal variability in comparison with their real variability. Finally, membership of the Zone results in lower nominal variability in comparison with that of non-members. The Zone members, however, experience no significant difference in real variability compared with that of non-members.