The Democratic Republic of the Congo is a Central African nation, and is also referred to as DR Congo. In the 19th century, the country had a thriving slave-trade business. Arab slave traders offered clothes, jewelry, beads, and cowrie shells to slave owners in exchange for slaves. In 1885, King Leopold II of Belgium gained control of DR Congo, and the dictatorial leader established a rubber processing industry in the country. As a result of the growing rubber market inside and outside the country, King Leopold II of Belgium introduced the Congolese franc as the first official currency of DR Congo. The Congolese franc uses the symbol CF and the code CDF.
The Congolese franc was useful in the export of rubber since it had the same value as the Belgium franc. One franc is subdivided into 100 units called centimes. The Congolese franc was produced and circulated by the Bank of the Belgian Congo. The first coins issued were made from copper or silver, and were produced in varying denominations. The bank also issued banknotes in denominations of 10, 20, 100, and 1,000 francs. DR Congo used the Congolese franc until 1967, when they abandoned it for the zaire.
The zaire existed between 1967 and 1997, and was issued at the rate of 1 zaire to 1000 Congolese francs. The National Bank of the Congo was responsible for producing and issuing the currency. The bank issued brass coins and banknotes which bore the portrait of Mobutu Sese Seko. The currency had a fixed exchange rate to the US dollar, which was set at 2 zaire for 1 US dollar. The fixed exchange rate led to the emergence of foreign exchange black market, where people exchanged zaires for foreign currency. Black market operations led to massive inflation of the zaire, which significantly hurt the country's economy. In October 1993, the zaire exchanged with the US dollar at 8 million zaire for 1 US dollar. In 1997, the country dropped the zaire as its official currency in favor of the Congolese franc.
Second Congolese Franc
DR Congo re-introduced the Congolese franc due to hyperinflation of the zaire. The exchange rate of the Congolese franc to the new zaire was 1 Congolese franc for 100,000 new zaire. DR Congo still uses the Congolese franc as its official currency. Although the central bank issued Congolese franc coins, they are no longer in use because inflation has rendered them valueless. The highest denominated banknote is worth 20,000 francs.
Use of the US DollarDespite the Congolese franc being the official legal tender in DR Congo, businesses mainly use the US dollar for trade. The US dollar is preferred by traders because of its stability. DR Congo went through a civil war from 1997 to 2003, which devastated the country’s economy. This political instability resulted in the loss of value of the Congolese franc. Consequently, people in DR Congo lost confidence in their currency and preferred to use foreign currency. Lack of regulations in the foreign exchange market also led to the high rates of inflation in the country. In the past two years, the DR Congo's central bank has succeeded in stabilizing the Congolese currency, and its goal is to restore the Congolese franc as the primary currency in DR Congo.
Your MLA Citation
Your APA Citation
Your Chicago Citation
Your Harvard CitationRemember to italicize the title of this article in your Harvard citation.