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I stumbled onto a bit of a mystery. A strange financial blip in a historical database crossed my path and I was wondering if anyone could explain its meaning/cause for me? If this is not the right forum please advise.

The database blip is here. I was researching the 1969 exchange rate between the French franc and the US dollar and saw the chart below. As you can see there was a sharp drop (approx 11%) in the exchange value of the franc in a single day somewhere in the first half of August 1969. What was the exact date and what happened on that date to cause such a dramatic drop?

(Or was it the other way around and something happened to skyrocket the exchange value of the dollar?)

Exchange Rate Chart c.1969, from fxtop.com

For the record, I am not a financial specialist, I was researching the data in the context of the use of money in an old film from that era.

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That was the devaluation of the French franc on 8 August, 1969 (by 12.5% in terms of par value), decided by President Pompidou and his finance minister Giscard d'Estaing.

In those days, exchange rates were quasi-fixed, but subject to periodic realignments (the so-called Bretton Woods system of exchange rates, which was replaced by today's floating rate system in 1973).

In 1968, under President De Gaulle, there had been social unrest and large wage increases in France. His successor Pompidou thought the country had lost competitiveness and decided to devalue early in his first term to get a head start on the problem.

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  • $\begingroup$ Normally a good SE answer is slow to arise but this is a perfect answer to my question. Thanks for the information. $\endgroup$ – O.M.Y. Jan 26 '16 at 4:05
  • $\begingroup$ Reminds me of Abenomics $\endgroup$ – Mehdi Jan 26 '16 at 11:04
  • $\begingroup$ 747 views in just 24 hours! There must be a lot of French people on quant.stackexchange $\endgroup$ – Alex C Jan 27 '16 at 3:00
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To follow up on Alex's answer. The USD/FRF peg change was effective as of 10 August 1969, when it changed from 4.9371 Franc to 5.55 Franc (per 1 USD), i.e. a 12.4% surge in USDFRF.

Here is the full list of peg changes:
https://en.wikipedia.org/wiki/Bretton_Woods_system#French_franc

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