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The French Franc’s August 1969 Devaluation

Article Quant Q&A · Author: O.M.Y.
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Summary

The document explains a sharp historical move in the French franc’s exchange value against the US dollar. It identifies the cause as France’s devaluation of the franc, decided by President Pompidou and Finance Minister Giscard d’Estaing, with the adjustment announced on 8 August 1969 and the new peg taking effect on 10 August. Under the Bretton Woods system, exchange rates were managed and could be realigned, so this was a policy change rather than an ordinary floating-market move.

The account connects the decision to France’s loss of competitiveness following the 1968 social unrest and large wage increases. It reports the peg changing from 4.9371 francs to 5.55 francs per dollar, which explains why a chart of the dollar’s value in francs would show a sharp rise. The document offers a brief historical explanation, not a detailed policy analysis; it does not provide the underlying chart or independent evidence for the stated economic rationale.

Key ideas

  • France devalued the franc in August 1969, producing a sharp change in its dollar exchange rate.
  • The policy decision was attributed to President Pompidou and Finance Minister Giscard d’Estaing.
  • The new peg took effect on 10 August, changing the number of francs exchanged for one US dollar.
  • The document links the devaluation to lost competitiveness after wage increases and social unrest in 1968.

Tags

ForexFixed income
Full text
# What happened to the French franc value in August 1969?


# What happened to the French franc value in August 1969?












I stumbled onto a bit of a mystery. A strange financial blip in a historical database crossed my path and I was wondering if anyone could explain its meaning/cause for me? If this is not the right forum please advise.

The database blip is here. I was researching the 1969 exchange rate between the French franc and the US dollar and saw the chart below. As you can see there was a sharp drop (approx 11%) in the exchange value of the franc in a single day somewhere in the first half of August 1969. What was the exact date and what happened on that date to cause such a dramatic drop?

(Or was it the other way around and something happened to skyrocket the exchange value of the dollar?)

For the record, I am not a financial specialist, I was researching the data in the context of the use of money in an old film from that era.

## Answer by Alex C (score 20, accepted)

https://quant.stackexchange.com/a/22923

That was the devaluation of the French franc on 8 August, 1969 (by 12.5% in terms of par value), decided by President Pompidou and his finance minister Giscard d'Estaing.

In those days, exchange rates were quasi-fixed, but subject to periodic realignments (the so-called Bretton Woods system of exchange rates, which was replaced by today's floating rate system in 1973).

In 1968, under President De Gaulle, there had been social unrest and large wage increases in France. His successor Pompidou thought the country had lost competitiveness and decided to devalue early in his first term to get a head start on the problem.

## Answer by Phil-ZXX (score 2)

https://quant.stackexchange.com/a/39192

To follow up on Alex's answer. The USD/FRF peg change was effective as of 10 August 1969, when it changed from 4.9371 Franc to 5.55 Franc (per 1 USD), i.e. a 12.4% surge in USDFRF.

Here is the full list of peg changes: https://en.wikipedia.org/wiki/Bretton_Woods_system#French_franc

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.