Sao Tome, Sao Tome and Principe, 5 Jan – The government of Sao Tome and Principe has introduced the fixed exchange rate system by setting the value of one euro at 24,500 dobras, the country’s central bank has announced.
The pegging of the dobra to the euro was announced last weekend and takes effect today, Tuesday.
The change in Sao Tome’s exchange rate system results from the Economic Cooperation Agreement signed last 28 July by the governments of Sao Tome and Principe and Portugal.
The exchange rate system is meant to assure “price stability and the creation of conditions for foreign investment,” states a note released by the Central Bank of Sao Tome and Principe.
The Central Bank also indicated that Portugal and Sao Tome and Principe verified that the island country’s economy had “evolved in a way compatible with the necessary macroeconomic and financial stability” and that on the legislative side “all conditions have been met for the Economic Cooperation Agreement to take force”.
Central Bank Governor Luis de Sousa has urged “budgetary rigour”, which he says is “the main tool for success of this agreement”.