South Sudan devalued its currency by 84 percent as the government abandoned efforts to fix the exchange rate and allowed the pound to trade freely, surrendering to prices charged in the black market.
The central bank adopted the parallel market rate of 18.50 per dollar as of midnight on Tuesday from a previous fixed rate of 2.96, Governor Kornelio Koriom Mayik told reporters in Juba, the capital. The regulator will supply the market with occasional dollar sales, he said.
The devaluation follows similar steps by other oil-producing nations with Brent crude hovering around $36 a barrel, down almost 70 percent since a June 2014 high. Angola, Africa’s second-biggest producer, has devalued its currency at least twice this year, and Kazakhstan let the tenge float freely, while exporters from Russia to Colombia have let their currencies slide.
“South Sudan is highly dependent on oil and their decision to let the pound float is the latest example of the pressures that falling oil prices are bringing to bear on oil-producing countries,” Per Hammarlund, chief emerging-markets strategist at SEB AB in Stockholm, said. The latest fall in oil was probably the “last nail in the coffin.
Source: Bloomberg
