Guinea Franc (GNF)
Candlefocus EditorThe main economic activities of Guinea are agriculture, minerals, and forestry and fishing. The main crops grown in Guinea are rice, corn, cassava, banana, and yams, while the minerals mined there are bauxite, diamonds and gold.
In 1958, when the country achieved its independence, the Guinea franc, or GNF, replaced the CFA franc as the official currency of Guinea. The GNF is divided into 100 centimes and is issued in coins and notes with denominations of 250, 500, 1000, and 5000.
The Guinea franc does not have a fixed rate of exchange but instead freely floats on the international currency markets. Despite its unstable exchange rate, the flotation of the GNF was an important step in introducing market mechanisms in the operation of the economy.
Whereas in the past the CFA franc was used as the main means of payment by the international community for their purchases of the country's natural resources, Guinea now has increased autonomy for setting prices for their resources.
The Guinea franc has consequently helped to bring about a better balance in the country's balance of payments and improved exports. Furthermore, the GNF has given the central bank greater scope to maintain stability in the exchange rate between the GNF and other major international currencies.
The government of Guinea has also put in place a number of measures to stabilise the exchange rate and foster economic stability. These includeincreased monitoring of the inflow and outflow of foreign currency and a flexible exchange rate system.
In addition, the Central Bank of the Republic of Guinea has been issuing stabilization bonds whose yields are linked to the GNF exchange rate. The purpose of these bonds is to ensure the stability of the Guinea franc rather than to ensure rapid appreciation.
Overall, the adoption of the GNF has resulted in increased economic autonomy for Guinea and fostered greater stability in the exchange rate. This in turn has helped the country achieve greater financial and economic progress.