The Central Bank of South Sudan is unable to control the devaluation of the South Sudanese Pound after the regulator depleted its foreign currency reserves. Experts warn that the country which has three exchange rates could fall into economic collapse as South Sudan battles weak oil production, lack of external aid among other problems.
Crude oil production, which drives South Sudan’s revenue fell by 28% from 250,000 BPD before the civil war to 180,000 BPD now. The low output, coupled with the volatile oil prices due to the pandemic partly contributed to the decline in foreign currency reserves.
Bank of South Sudan Deputy Daniel Kech Pouch says, “It’s difficult for us now at this moment to stop this rapid exchange rate because we don’t have the [foreign] reserves for us to intervene in the market.”
Last week on Thursday, the central bank rate stood at 165 Sudanese pounds for a dollar, while the commercial bank rate was at 190 Sudanese pounds. On the other hand, the exchange rate of the Pound in the black market doubled the commercial banks’ rate, with every dollar exchanging for 400 Sudanese pounds.
Pouch believes that there are other avenues in which institutions channel foreign currency into South Sudan. According to VOA, international agencies bring foreign currency into the country and sell it to the people directly or through parallel markets.
“…there are some commercial banks that bring money, which does not also come through the Central Bank. You know, the Central bank has no system that unifies the operation of the bank [with] the flow of money, whether inside or going outside,” VOA quotes Pouch.
Foreign currency deficiency in the country has affected the prices of essential goods like meat, oil and cereals. The low reserves could devalue the Sudanese Pound further, limiting the country’s capacity to import products.
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