20 Ouguiya – Mauritania

In 2004, Mauritania's currency, the ouguiya (MRO), operated under a tightly managed float, a system maintained by the Banque Centrale de Mauritanie (BCM). The country's monetary policy was fundamentally constrained by its membership in the Franc Zone, as it was part of the West African Economic and Monetary Union (WAEMU) at the time, though it used its own currency rather than the CFA franc. This unique position meant its currency reserves were held in French Treasury and its exchange rate was pegged to a basket of currencies, with a heavy weighting on the euro, which provided stability but limited independent monetary tools.

The economic backdrop for the ouguiya in 2004 was one of cautious optimism, fueled by anticipation of future oil revenues from the offshore Chinguetti field, slated to begin production in 2006. This prospect helped maintain macroeconomic stability and investor confidence. However, the economy remained vulnerable due to a narrow base, reliant on exports of iron ore and fish, and susceptible to climatic shocks and fluctuations in global commodity prices. Inflation was a persistent concern, often driven by volatile food and fuel prices, which the BCM sought to control through its managed exchange rate and limited monetary interventions.

A pivotal currency event was on the horizon in 2004. The government had already announced plans to undertake a significant redenomination of the ouguiya, set for January 2005. The plan was to introduce a new ouguiya (MRU) at a rate of 1 new ouguiya = 10 old ouguiya (MRO), effectively removing a zero to simplify transactions and accounting. Therefore, 2004 was a year of preparation for this technical change, aimed at boosting efficiency and aligning the currency system with a more modern financial framework, while the underlying managed-float regime remained intact.