The Central Bank of South Sudan has reportedly run out of foreign reserves, the second deputy governor Daniel Kech Pouch has said.
This means the bank can no longer strengthen the value of the South Sudanese Pounds due to lack of US dollars and other hard currencies.
The pound has been depreciating drastically following the drop of the country’s oil revenues and irregularities in the collection of non-oil revenue.
As of this week, 100 US dollars is equivalent to 40,000 South Sudanese Pounds in the black market, while at the Central Bank, a hundred dollars sells is at 16,400 pounds.
Most of the consumers have complained about a sharp rise in prices of basic commodities in popular markets.
Traders have also raised concerns over their inability to access hard currency. They say they are unable to import more goods without hard currency.
Daniel Kech, deputy bank governor, reportedly told the press on Wednesday 19 August that they have depleted the reserve at the BoSS.
“It’s difficult for us now at this moment to stop this rapid exchange rate because we don’t have the reserve for us to intervene in the market,” he affirmed. ”
Mr. Kech admitted that the fluctuation is being exacerbated by the various exchange rates.
“There is an inductive rate that is being used by the central bank and there is a rate that is being used by the commercial banks, and…each commercial bank has its [own] rate,” he stressed.
This week, an economist at Dr. John Garang Memorial University attributed the devaluation to the uncontrollable floating of the currency by the Central Bank.
A floating exchange rate is a regime where the currency price of a nation is set by the forex market based on supply and demand relative to other currencies.
This is in contrast to a fixed exchange rate, in which the government entirely or predominantly determines the rate.
But Professor Abraham Matoc warned that floating also makes currencies potentially more volatile or unstable in value when the market and other conditions change unpredictably.
South Sudan gets much of its hard currency from oil sales.
But the current production levels of the crude oil have dropped from 250,000 barrels per day to around 180,000 barrels per day.
“The only thing that can redeem this situation is for us to add this oil production, either to increase or the prices to go up,” Mr. Kech concluded.
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