Central Bank pour dollars on the streets to save weakening pound
The Bank of South Sudan has embarked on a fresh dollar action to tame the escalating prices of commodities.
The Central Bank said Friday that will release $8 million to commercial banks and forex bureaus, starting Monday, June 13, in an attempt to salvage the local currency.
South Sudanese Pound has been in a depreciating spree against the dollar in the past week.
The move by the national lender is expected to possibly lower prices of fuel and essential commodities.
Central Bank Governor, Moses Makur Deng, remained confident that the injection of $5 million into commercial banks, and $3 million to forex bureaus on weekly basis would offer a reprieve.
Commercial banks will receive the dollar on Monday with the forex bureaus three days later – on Thursday.
“After two weeks, we will increase it to $13 million. And we are willing even to increase further to $20 million dollar a week to make sure that dollar must come down,” Makur said.
The BoSS governor said speculation of market dealers about rise in currency exchange rates, ongoing payment of salary arrears, and the imported prices of imported commodities from the neighboring countries has triggered the appreciation of the foreign currency.
“We warn speculators that your basis for expecting rise in the value of dollar might not be concrete as you think, because we have now reserved (dollar) with this situation until it goes back to where we want it, SSP 400 per dollar,” Governor Makur warned.
He assured the public that exchange rates would go down as soon as possible, adding that they had introduced what he called, Central Bank Bills to be used by banks.
“Moreover, we are going to introduce instruments that do the same work of foreign currency auction that is called term deposits. It is another way of reducing money in circulation,” he added.
“We want to inform the public that basically the bank of South Sudan, has not increased the money supply, we are still in the range of 10% which was injected early this year. All these discrepancies happening here and there, are just temporary, they are not fundamental. Although we will be paying some salary arrears, relevant dollar equivalent to that amount will be auctioned.”
He stressed that the bank had enough dollar reserves which will help lower exchange rates and that increased oil production was underway to increase reserves.
According to Makur, the bank earlier made a research and proposed to ban lending money to individuals especially, the market dealers at black market, expecting a presidential decree banning it but it did not really happen as they expected.
“The Central Bank made a research extended to 4000 years before Christ. We made the recommendations to the judiciary and the members of parliament. But what happened was a circular from the Ministry of Justice, (but) we expected to have a presidential order banning this, and from there we make the laws to make it legally banned because it distorts economic activities,” said the governor.
“These people (market dealers), are difficult to supervise, they don’t deal in well-known places with sign posts, they move around. You cannot trust them and you cannot trust what they say because they are not reliable.”
He added that market dealing makes people lazy and might not be productive anymore.
The plan to auction dollar to commercial banks was announced last month by the Bank of South Sudan, geared to lower exchange rates, but it did not seem to happen.