Parallel market for foreign exchange and hyperinflation: the case of Congo-Kinshasa

This study analyses the relationship between exchange rate reform and inflation in Congo-DRC, during the 1980s and 1990s. Attempts to unify official and black market exchange rates by officially floating the domestic currency has led to a large increase inflation, with an acceleration in the rate of local currency depreciation. Such hyperinflation has damaged the credibility of the economic reforms and weakened official commitment to it thereafter. The phenomenon of Dollarisation is determined by situations in which more than one currency is used as means of payment. A leading foreign currency like the dollar tends to replace the domestic currency.