Word: franc
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Although the late government of Premier Maurice Bourges-Maunoury had collapsed over Algeria, the squabbling now turned on how to solve the economic crisis: by year's end France may have no money to pay for imports. After a talk with President Rene Coty, Pinay declared: "In view of the gravity of the situation explained to me by the President, I do not think I have the right to refuse." In 1952 Conservative Antoine Pinay had made himself a hero by "saving the franc." But last week his proposals to hold the line on taxes, slash expenditures and economize...
Current Performance: in his three months in office, faced with galloping inflation and declining gold and dollar reserves, he first demanded a 10% cut in the government budget, then succeeded in devaluing the franc by 20% without ever using the horrid word "devaluation." ("Every country has its totems-holy things which are not mentioned.") To prevent a new round of inflation, he now demands selected price controls and a six months "wage truce" from labor. The latest Bank of France statement shows France for the first time in two years taking in appreciably more foreign exchange than it pays...
...chief pressures for revaluation do not come from inside West Germany, but from its European trade partners. They are worried because West Germany has lured so much investment capital away from the soft British pound and the French franc, captured many overseas customers that other European nations would like to have. Great Britain is in the forefront in demanding German revaluation. Britain's gold and dollar reserves dropped $225 million in August. the biggest dip since the Suez crisis, and its deficit with the European payments union reached $178 million (compared with West Germany's fat surplus...
...When France devalued the franc, newly independent Tunisia's President Habib Bourguiba saw a chance to make a little money-and a little propaganda. By the end of the year, said Bourguiba last week. Tunisia will abandon the French franc and issue its own currency, thereby freeing itself from a "policy dominated by instability and by the requirements of a war [in Algeria] whose end cannot be seen...
...this point, and after all banks had closed for the weekend, Gaillard was ready for his big step. It was devaluation, but with a difference. The franc was devalued to 420 to the dollar in all tourist transactions. Imports in effect would cost 20% more, except on those imports deemed vital to the continuing expansion of French industry. On these "exceptions," such as fuel and key raw materials (wool, cotton and steel products), accounting for about 60% of French imports, the rate would remain 350 to the dollar. The calculated effect: a cut in import spending. Next, to give France...