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EURO FALLS TO PARITY AGAINST THE DOLLAR: IMPACT ON CAMEROON'S FOREIGN TRADE OPERATIONS

The depreciation of the Euro against the US dollar has had several consequences on Cameroon's foreign trade operations conducted using the CFA franc. The fact that the CFA franc is pegged to the value of the euro has brought down the prices of some Cameroonian products denominated in CFA francs and intended for export. This is particularly true of manufactured goods and agro-food products.

 

From another angle, this situation can be a great advantage for exporters of raw materials generally denominated in US dollars, such as oil and gas. These products saw their revenues increase in the first half of 2022 owing to the conflict between Russia and Ukraine.

 

Cameroonian companies and small and medium-sized enterprises wishing to import machinery, equipment and other digital technologies from dollar-denominated markets should exercise much more caution. The main reason being such a situation will increase production costs, which will eventually determine the selling prices of these products, thus reducing their competitiveness and spurring inflation.

 

Nonetheless, the Euro still has a higher value than the Chinese Yuan. However, given the considerable number of dollar-denominated imports into Cameroon from China, import costs from China, especially for Cameroonian SMEs, will increase.

 

Believing that this depreciation of the Euro against the US dollar may last for several months, Cameroonian companies and SMEs are advised to lean on statistical forecasting models to be able to play it safe while going about their businesses.

 

Source: Cameroon Tribune No. 12640/8839 of 14 July 2022