Exchange rate instability and its effects on the functioning of the clearing houses

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Periodical article

Title:	Exchange rate instability and its effects on the functioning of the clearing houses
Author:	Kamara, Samura
Year:	1987
Periodical:	Savings and Development
Volume:	11
Issue:	4
Pages:	423-435
Language:	English
Geographic term:	West Africa
Subjects:	foreign exchange exchange rates
External link:	https://www.jstor.org/stable/25830129
Abstract:	Perhaps the most important element of risk in the operations of the West African Clearing House (WACH) mechanism in the more recent past has been the increasing degree of monetary substitution among the WACH member countries. The author examines the nature of exchange rate risk on international trade and capital transactions and estimates exchange rate risk on WACH transactions, relying on the frequency of exchange rate adjustments and measures of the variability of the nominal exchange rates of Clearing House currencies as proxies. While the exact influence of exchange rate risk on the volume of WACH transactions cannot be statistically ascertained, what is apparent is the rapid decline in the volume of intra-West African trade that is channelled through the WACH as well as the tendency for the net-creditor and debtor positions in the Clearing House to reflect the differences in currency (in)convertibility levels as the exchange rates of the member countries are being massively devalued. Bibliogr., sum. in French.