The Socialists' economic plan may be faltering.
The French franc fell to an all-time low of 6.31 to the US dollar April 7, threatening to jeopardize the Socialist gamble of expanding the economy while checking inflation.
The run on the franc was attributed to the lowering of American interest rates. But the franc has been under attack since the Socialist victory last May.
Analysts here say the franc is fundamentally weak and susceptible to further batterings, primarily because France's inflation is clipping along at a 14 percent annual pace. This is about 9 percent higher than that of its main trading partner, West Germany.
''When there is a high rate of inflation going against a low rate of inflation, something has to give,'' one banker explained.
The differential makes French goods dearer than their German counterparts. To correct this imbalance, analysts say the French government has two options, both unpleasant.
First, the government could devalue the franc. It opted for this solution last October when it decreased the value of the franc 8.5 percent against the German mark. But this increases the prices of French imports.
Already, the franc's slide against the dollar has swelled France's dollar-priced oil bill by 6 percent despite a 14 percent reduction in imports.
A second devaluation in a year would also be a bad advertisement for socialism. Continued devaluations reduce consumer and investor confidence in a country's currency, explained Jacques Rousselt of the First Boston Investment Bank.
If France devalued every six months to compensate for inflation, ''Investment here (France) would plummet,'' he says.
The other option is to tighten monetary and fiscal policies in an effort to curb inflation. But a policy of high interest rates and reduced social spending was the prescription of the previous conservative government and would mean ditching the Socialists' attempt to ''relaunch'' the French economy and cut unemployment.
As a result, analysts are predicting the government will devalue.
Devaluation has become a political question not only because of domestic considerations, but also because France is a member of the European monetary system and must obtain German approval before devaluing.
The Schmidt government may refuse such a request. The French may still go ahead, but a unilateral action might mean the end of the monetary union.
Meanwhile, the government is frantically trying to hold the line against further retreat of the franc. The Bank of France has been buying francs at a furious pace. And in recent weeks, the government has tightened exchange controls and raised money market rates from 15 to 17 percent.
Further, Budget Minister Laurent Fabius has been stressing that the government will hold this year's budget deficit to below 3 percent of gross domestic product.
Still, analysts are skeptical the Socialists will tighten the fiscal and monetary screws enough to bring down inflation.
But there is evidence of what seems to be a growing battle between government hard-liners who want to push on with social and economic change, and a moderate faction that wants to slow down.
Moderates such as Finance Minister Jacques Delors have been urging ''a pause'' in the reforms to steady the franc and keep business confidence alive.
At the same time, more orthodox Socialists have been complaining the government has not been reforming fast enough.