Historical Sketch

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 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 Tadjoura Protectorate of 1883. The different possessions were transformed into the Somali Coast colony in 1896. After World War II, all French colonies turned into overseas territory, and in 1967, Somali Coast got renamed into Afar and Issa Territory, after the two predominant ethnic groups. In 1977 finally, 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. The Djiboutian Franc was at 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, Somali Coast was exempt and did not take over the CFA Franc. Instead, in March 1949, the link to the French Franc was severed and the Djiboutian Franc repegged to the US Dollar. The Bank of Indochina lost its privilege, and paper money was issued by the treasury. The Franc's peg was adjusted in 1971 and 1973 to compensate for the Dollar devaluation. The name change into Afar and Issa Territory in 1967 and independence as Republic of Djibouti ten years later did not have any effect on the monetary situation. The newly created central bank took over from the treasury in 1979, otherwise the currency did not change.

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

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