Home | News    Wednesday 16 December 2015

South Sudan allows free floating foreign exchange rate

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December 15, 2015 (JUBA) - South Sudan has abandoned a fixed exchange rate and surrendered its currency, the South Sudanese pound, to trade freely in the market against the US dollar and other foreign currencies, to compete with the black market.

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A file photo shows notes of the new South Sudan pound, which pictures the late South Sudanese independence leader John Garang, in Juba on July 18, 2011. (Getty)

Speaking at a joint news conference on Monday, finance and economic planning minister, David Deng Athorbei, announced that the government will also from now on increase the salary of the low income category of employees and take more fiscal measures to manage collection of non-oil revenues.

He did not elaborate on when the salary increment will come into effect and where to get the money to top up the salaries in the face of the economic crisis in the country.

Athorbei declared that there will be no more official rate for the pound against the US dollar and other foreign currencies. He said the foreign exchange rate in the country will now be managed by market forces of demand and supply and the government will occasionally supply the markets at the same rate.

"To minimize the effects of these reforms, the government will undertake to raise the salaries of the lower income group, said the finance minister.

He warned people to expect losses in the short term although he expressed hope that the government could benefit from the free floating foreign exchange rate in the long term.

“Although we expect a lot of benefits to our country as a result of these reforms, it is also true that these measures will suddenly have some adverse effects on our people particularly in the short term,” warned Athorbei, who was joined at the press conference by the governor of central bank, Kornelio Koryom Mayiik.

He said the government will now undertake to enlighten the public about the difficulties the people would be facing as the new monetary measures are enforced.

“I therefore ask all of you to be patient as we undertake these difficult necessary reform measures,” he appealed.

Speaking at the same news conference, central bank governor Kornelio Koriom Mayiik attributed the cause of the decision to reduction in the oil output due to the the war that erupted two years ago on 15 December 2013.

Mayiik explained that the decline in crude oil revenues and oil prices that have plunged below $40 a barrel have resulted in dollar shortages that weighed on the local currency and caused the value of the greenback to soar in the black market.

He appealed to the international community to help the country make the switch as it doesn’t have the reserves to back a move to the free-floating currency.

He said the previous system of managed floating exchange rate has made the move because rich people would buy the currency at the official rate and then sell it to the poor.

“We are being driven by the supply and demand of commodities on the market, “said Mayik admitting the devaluing the pound was just a formal way but it already existed in the market.

“The money was already devalued. People were no longer receiving money at the official rate and nobody could control it.”

The top bank official said there were already parallel rate, an official exchange rate of 2.96 South Sudanese pounds per US dollar set by the central bank, and another rate based on supply and demand in the market.

He said the move will now encourage international humanitarian and development organisations as well as foreign investors to inject more hard currencies into circulation and to increase government revenue as there will be no fixing for business, development and job opportunities.

The changes have reversed the previous system in which individuals were able to access dollars at the official rate set at 2.96 South Sudanese pounds per US dollar by the central bank while majority go to the market.

With the introduction of the new policy, he said, everybody would now be able to access US dollars at a similar rate. The central bank will from time to time make avail dollars to those that would sell or buy.

Senior government officials, including top management of the central bank had been selling US dollars in the black market at the expense of the poor.

This latest move to float the local currency is seen to have resulted from lack of hard currency reserves either in the central bank or in the account of the ministry of finance and economic planning.

Local banks have responded to the sudden change of the government’s monetary policy with the Kenyan Commercial Bank (KCB) in Juba on Tuesday setting the exchange rate to 20 South Sudanese pounds against 1 dollar.

(ST)

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  • 16 December 2015 01:22, by Ayuiu Makuac Lam

    South Sudanese, citizens has got hardship life through central bank Governor,
    Karlo, Koriom Mayiik has completely destroyed south Sudan more than Riek Machar.

    repondre message

    • 16 December 2015 06:21, by dinkdong

      It is about time you condemned your likes, Ayuiu!

      repondre message

      • 16 December 2015 15:04, by Hardlinner

        dingdong, it look like yuiu was one of those benefiting from government control exchange rates. now they will have no to loot poor people at black market.

        repondre message

        • 17 December 2015 06:04, by dinkdong

          @ Hardlinner-
          That’s absolutely correct!

          repondre message

      • 17 December 2015 06:34, by Lotodo Awino Odug

        who knows the interests of the market to let it just float anyhow! we have many foreigners in our country, they will be serve well by this policy, then what about our poor people?

        repondre message

    • 16 December 2015 06:53, by okucu pa lotinokwan

      By abandoning the fixed price of your couuntry currency,it means there is no govt any more also better to give power to the foreign nation to rule this country.
      Central Bank is most corrupted,and brough the poor communities to suffer in the name of dollar.

      repondre message

      • 16 December 2015 07:36, by Mi diit

        Ahahahaaa....Oh, my God!

        South Sudan has gone to the dogs for sure.

        repondre message

        • 16 December 2015 09:13, by Khent

          Mi diit

          And you suppose that Khartoum’s dogs would do a better job? I don’t think so.

          repondre message

          • 16 December 2015 17:13, by Mi diit

            Khent,

            It is better to be a Khartoum’s dog then to be a Kampala’s dog.

            Khartoum was claiming sovereignty over the country and Kampala is claiming colonialism of South Sudan.

            Khartoum was fight an internal war against its rebels while Kampala is fighting an internal interference war against the citizens of another country.

            Riek was a rebel but now Kiir is a president of independent state. See!

            repondre message

  • 16 December 2015 06:05, by Ajongtar

    South Sudan has gone Bankruptcy and its already calling for indirect bailout from the international community.

    Mr. Kiir if i were you, I could have fired those PEACE obstructors like Minister Michael Makuie, Malong AWAN, Trailler Elia LOMURO and put them under detention or Kill them, becouse they are all behind these economic acts.

    GOD HELP THE POORER SOUTH SUDANESE

    repondre message

  • 16 December 2015 06:47, by Angelo Achuil

    sounds to me like good decision delayed for long time. It’s near impossible to manipulate the "invisible hand." The best one can do for our economy is to let the prices of all things be what the prices really are and not hide the truth. Next thing is to see this put in action!!!

    repondre message

    • 16 December 2015 09:31, by Lual Garang De Lual

      Dear Readers

      It is long time overdue decision since independent of South Sudan. I don’t know why they delayed it. All economists will agree with the decision to devalue the currency but It will look painful now to the common man but in long term, it will pay dividend.

      repondre message

  • 16 December 2015 07:19, by Ayuiu Makuac Lam

    How can people of South Sudan, define this situations of devalued their currency?

    repondre message

  • 16 December 2015 07:29, by KEAT BAYAk

    This act shows that South Sudan economy have collapse and the country failed beyond repair. Though still some people are still commenting blindly not realizing how the innocent people are suffering. If the Central Bank rate goes to that extent, what about the black rate?. Are we still saying South Sudan will still recovered from this mess if no measures are taken into consideration?

    repondre message

  • 16 December 2015 07:38, by Son of Ngundeng

    Who will deny government of Dinka kingdom lost the directions?

    We are rebelled against the regime, and citizens thought we were wrong. Central bank governor become the most rebel against the South Sudanese within, with his friend Deng Athurbai,the son of Ethiopian woman.

    GOD SAFE SOUTH SUDAN IN THE HANDS OF TRIATORS.

    Son of prophet
    New location front line.

    repondre message

  • 16 December 2015 07:38, by KEAT BAYAk

    If South Sudan could be a country where freedom of expressing is allowed, then many people will move out and protest against this act. But since it was mention some time back, there is no rubber bullet, it scared many people to protest or express their feeling. It is just matter of time, God will help this country and things will get fix.

    repondre message

  • 16 December 2015 08:22, by Simpleman

    The Blood of the lambs are searching for their destinies.

    repondre message

  • 16 December 2015 10:50, by Mr. Right

    The gov’t had incurred a lot of deficits in the past due to their reluctant in devaluing the currency.
    It is a great decision delayed for a long time. The BOSS has advantages in controlling the money in circulation. Malesh, diminishing black market!

    repondre message

    • 16 December 2015 15:01, by Hardlinner

      no more government officials looting poor people at black market. it look like black market is going to die for sure. people would now go to more secure financial institutes to exchange their monies.

      repondre message

  • 16 December 2015 13:46, by Eastern

    .....the fools running Bank of South Sudan have come to their senses after the national reserve has run dry, shame on the kleptocratic leadership!!!!!

    repondre message

  • 16 December 2015 13:50, by Eastern

    .....increasing salaries for the low income earners won’t help either as the black market exchange rates are going to shoot up for obvious reasons: it he income from oil exports has dwindled; non oil revenue goes to line the pockets of Kiir loyalists......The country is on its knees thanks to incompetent leadership!!!!

    repondre message

    • 16 December 2015 15:11, by Hardlinner

      Eastern, whether oil field run at their full capacity, still the drop in world crude oil prices would still have negatively affect the situation. the failure by government to diversify the economy have now let to scarcity of dollar in the market.

      repondre message

      • 16 December 2015 16:10, by Eastern

        .....the damp oil transit agreement with the Sudan means Kiirs pays Bashir more money than he earns from a barrel of crude. Didn’t Dr Lam point out that the agreement was bad? Now SPLM members want to empower Kiir rather than defang him, the Council of States ratified his 36/2015 AD order. Are our leaders not cursed really? OUR LEADERS DONT KNOW SOUTH SUDANESE PRIORITIES, they should quit!!

        repondre message

  • 16 December 2015 16:18, by Ayuiu Makuac Lam

    If I were President Kiir, I would’ve to sack central bank governor Karilino Koriom Mayiik, he is doing nothing for the country, its citizens and other external relations since he was got appointment into that post of being a head of central bank of South Sudan.

    repondre message

    • 17 December 2015 06:18, by Lotodo Awino Odug

      Dear Mr. President, as a man who have done a lot for your government, I would only supplicate to your highness that the official rate for the pound should be set at 5.75 against the dollar. what Mr. Athorbei and Khoryom have done is good but it will make your government look like a mafia pretty soon. yours Tut.

      repondre message

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