Sunday, September 23, 2007

CFA versus Dollar!




CFA versus Dollar!








let's consider investment situation in Dhaka! Say you sold your car for 5,00000 taka. You kept the money in the bank. Hoping to have it at least doubled in 5 years and hoping you'd buy two cars at the end of the tenure! But after 5 years, thanks to inflation, the car you sold would cost you about 10,00000 taka! Bad investment.
But say you want to invest 1 lac taka here at West African country Cote d'Ivoire, in Abidjan the commercial capital. One lac taka will get you about 1428 USD*500=714000 CFA. )Note: 1 dollar=500 CFA and 1 dollar+70 taka @ calculated.).
Say you buy a small house with that money= 1 lac taka. after 5 years, say the house price is doubled. and you sold it by 2 lacs=or 2857 USD. But look at the graph and see how the price of CFA is increasing! Say when the election is complete and the CFA regained it's lost glory and become 1 dollar =1 CFA like before? Or, 1 dollar gives you only 250 CFA after 5 years from now?
Now you will sell the house at 714000*2=1428000 CFA? and convert it into USD and you get 1428000 USD? Or 1428000/250=5712 USD?
Sounds funny? I know there are a lots of caveats but show this to any CFA (Certified Financial Accountant ) and he'll gasp aloud I am sure.
Think about this, dear Bangladeshi investors!

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