Exchange Rate Regimes and Development

FERDI analyses the role of exchange-rate policies in the competitiveness of developing economies and their integration into global value chains. This research contributes to a better understanding of the conditions that promote export diversification and productive transformation, particularly in Africa.

Patrick Plane’s research shows that exchange-rate undervaluation encourages both upstream and downstream participation in global value chains. This effect is strengthened by digitalisation and plays a compensatory role in institutionally fragile settings.

 >> Da Piedade C., Jacolin L., Plane P. (2024) "Exchange rate undervaluation and African surges: What do we learn from exported products?", The World Economy.

>> Abdou, M., Elbadawi, I., Plane, P. et al. (2025) "Unravelling the nexus between exchange rate undervaluation and global value chains participation". Review of World Economics.

FERDI also conducts research on real exchange-rate misalignments, defined as the gap between the observed level of a currency and its estimated equilibrium value.

Édouard Mien’s working paper, Real Exchange-Rate Misalignments: Theories, Measurement and Implications for Developing Countries, provides an overview of the different measurement methods and their findings.

 >> Mien É. (2025) "Les mésalignements du taux de change réel: théories, mesures et implications pour les pays en développement", Ferdi Document de travail P349, février.  

In 2025, FERDI published the working paper WAEMU at a Crossroads? A Contribution to the Debate on the Perspective of its Monetary and Exchange Rate System, by Bruno Cabrillac, Patrick Guillaumont, Sylviane Guillaumont Jeanneney and Jean-Michel Severino.

The study analyses the different options available for the future development of the West African Monetary Union. It examines two complementary dimensions:

• the Union’s geographical and political scope;
• the monetary systems and exchange-rate regimes that could be adopted.

The authors consider several scenarios, including maintaining or reforming monetary cooperation with France, enlarging the Union, achieving full monetary autonomy or reshaping the monetary area.

The paper also examines measures that could limit the economic, financial and institutional risks associated with a possible transition from one regime to another. It therefore aims to inform a debate that lies fully within the sovereignty of the African countries concerned.

FERDI also works directly with central banks to place economic research at the service of their strategic thinking.

In 2023 and 2024, it contributed to events marking the fiftieth anniversary of Banky Foiben’i Madagasikara, the Central Bank of Madagascar, and organised several conferences on Madagascar’s exchange-rate regime.