XPF - CFP Franc

CFP Franc overview

The CFP Franc (franc Pacifique), symbolized as XPF, is a special currency used in the French overseas territories in the Pacific region, including French Polynesia, New Caledonia, and Wallis and Futuna. Introduced in 1945 following World War II, it was created to protect these territories from the severe depreciation of the French franc during the global economic crisis.

While the CFP Franc is tied to the Euro, it is used only in the Pacific territories and not in mainland France. This means that travelers from European countries need to exchange their Euros for CFP Francs when visiting these regions. 

History of the CFP Franc

The CFP franc was introduced in December 1945, at a time when France and many other countries ratified the Bretton Woods Agreement, which caused the French franc to devalue significantly in order to maintain a fixed exchange rate with the US dollar.

However, France wanted to protect its remote territories from this severe devaluation, so they created a separate currency for the Pacific – the CFP franc. Initially, CFP stood for Colonies françaises du Pacifique, meaning "French Colonies in the Pacific." In 2022, CFP was officially changed to Collectivités françaises du Pacifique, meaning "French Communities in the Pacific."

Initially, the CFP franc was pegged to the US dollar. However, in 1949, it became tightly linked to the French franc. When France adopted the euro in 1999, the fixed exchange rate of the CFP franc was also shifted to the euro, helping stabilize the value of this currency in international transactions.

Over the years, several changes were made to its form and denominations. In 2021, new, smaller coins were introduced, and the 1 and 2 franc coins were removed. To better align with modern trading systems, cash transactions in these territories are also rounded to the nearest specific value. For example, amounts ending in odd numbers like 1 or 2 francs are rounded down to 0, while amounts ending in 8 or 9 francs are rounded up to 10.

CFP Franc denominations

The CFP franc has the international currency code XPF and is issued by the Institut d'émission d'Outre-Mer (IEOM), a currency issuing organization based in Paris. 

The currency is divided into the following denominations. For banknotes:

• 500 francs

• 1,000 francs

• 5,000 francs

• 10,000 francs

For coin denominations:

• 5 francs

• 10 francs

• 20 francs

• 50 francs

• 100 francs

• 200 francs

Notably, CFP coins are often very finely crafted, with each denomination typically featuring images of the unique plant life and landscapes characteristic of French Polynesia and New Caledonia.

An important point to note is that the CFP franc is pegged to the euro. Therefore, when the value of the euro changes relative to other currencies like the US dollar, the value of the CFP franc also adjusts accordingly. The current exchange rate is 1 euro = 119.05 XPF.

The Difference from the Euro and the Role of the CFP Franc

Although the CFP franc is pegged to the euro, it is only used in France's special overseas territories and is not accepted in mainland France. This means that when traveling to regions like French Polynesia or New Caledonia, people from European countries still need to exchange their money to use the CFP franc. Currency exchange counters at airports or local banks are usually available to assist tourists in exchanging euros for CFP francs, making transactions more convenient.

Although the CFP franc is similar to the euro, it still plays an important role in promoting the economy in France's Pacific territories. Pegging the value of the CFP franc to the euro not only helps stabilize the economy but also contributes to building trust among investors and local residents.

Exchange Rate of the CFP Franc

The CFP Franc is pegged to the Euro at a fixed exchange rate of 1 Euro = 655.957 CFP Francs. This means the value of the CFP Franc fluctuates according to the exchange rate of the Euro, helping to stabilize and make the currency more reliable. Pegging the currency to the Euro is also seen as a "guarantee" from France to ensure the convertibility of the CFP Franc.

The exchange rate of the CFP Franc to other major currencies like the US Dollar (USD) and Euro (EUR) changes regularly. Since the XPF is pegged to the Euro, its exchange rate is directly affected by fluctuations in the Euro's value in the international market.

In terms of exchange rates, 1 USD is typically equivalent to a certain amount of XPF, and similarly, 1 Euro also has a fixed exchange rate with the XPF. The fluctuations in exchange rates reflect the economic and political conditions of the countries in the region, as well as global factors.

With its peg to the Euro, the CFP Franc is closely tied to the Euro's fluctuations, meaning its exchange rate can change depending on the economic conditions of the Eurozone and the global market.