Historical Sketch

The territories along the Red Sea came under Ottoman rule in the mid-16th century and were administered out of Egypt. The French colonization of the Somali territory began in 1862 with the establishment of a trading post in the city of Obock. In the late 1860s, a short-lived settlement with name Sheikh Said existed on the opposite shores of the Red Sea. The opening of the Suez Canal, triggered a series of treaties between France and local rulers, leading to the establishment of the Protectorate of Tadjoura in 1883. Further treaties were concluded in the subsequent years, and in 1896, the different possessions were merged into the Somali Coast colony. After World War II, all French colonies turned into overseas territory. In a referendum of 1958, the population voted against joining Somalia which was to be created by merging the British and Italian possessions. A second referendum in 1967 confirmed the earlier result but made also apparent the deep division between the two main ethnic groups. The consequence was a name change into French Territory of the Afars and the Issas. In 1977, after a third referendum, the territory attained independence as Republic of Djibouti.

Monetary History Overview

French accounting was introduced gradually in the French Somali Coast, but the Maria Theresa Thaler and the Indian Rupee were tolerated until the 1920s and remained a prominent medium of exchange. In 1908, the Bank of Indochina began operations and issued paper money in the following year. The Djiboutian Franc was on par with the French Franc, its convertibility into metropolitan currency was limited, however. When France reorganized its colonial currencies in Africa after World War II, Somaliland was exempt and did not take over the CFA Franc. In March 1949, a new monetary order was introduced and the Djiboutian Franc severed the link to the French currency and was pegged to the US Dollar. The Bank of Indochina had lost its privilege in all French colonies in 1948, and paper money issuance in Somaliland was mandated to the Treasury. The Franc did not follow the US Dollar devaluations against gold in 1971 and 1973, so that the peg got adjusted twice and did not change since. The name change of 1967 and independence ten years later did not affect the currency. Two years after independence, in 1979, the newly created central bank took over from the Treasury.

Djibouti joined the International Monetary Fund (IMF) on 29.12.1978.

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