South Sudan’s apex bank said Friday it will inject 8 million U.S. dollars, an increase from the previous 5 million dollars, into the economy on a weekly basis to strengthen the local currency, pound, against the dollar.
Moses Makur Deng, Governor of the Bank of South Sudan (BOSS), said the apex bank would auction 5 million dollars to commercial banks and 3 million dollars to forex bureaus to mop up excess liquidity as the South Sudanese pound (SSP) weakens against the dollar.
Makur said speculation by the market and ongoing payment of five months civil servants’ salary arrears are some of the reasons that have led to the weakening of the SSP against the dollar.
“We are releasing too much money into the economy and that could increase the value of the dollar to the SSP so to counteract that we have to increase the number of auctions of the foreign currency that we give to the market starting from next Monday (June 13),” he told journalists in Juba, the capital of South Sudan.
Makur revealed that in a fortnight once the market doesn’t stabilize they will again increase the forex from 8 million dollars weekly to 13 million dollars and then to 20 million dollars until the local currency stabilizes.
“We will watch the trend of the rates if it persists,” Makur said, noting that the government plans to improve its reserves coverage by increasing the production of the oil and strict adherence to an agreement between the apex bank, ministries of petroleum, and finance on transparency in oil sales.
South Sudan’s economy is struggling to recover from high inflation caused largely by years of conflict since December 2013 that hit its oil sector.
The country depends on oil revenues to finance 95 percent of its fiscal budget. Enditem