Market sentiment: How ‘‘street talk’’ affects the money market, exchange rates
South Sudanese pound appreciated against the US dollar by eight per cent leaving a trail of unfulfilled hopes in the market.
Initially trading at SSP686 per dollar, the local currency now goes for SSP634, but the change is yet to be felt in the price of basic commodities.
Mogga Doel, who works in Juba, said prices of major commodities like flour, beans and bread, remained high despite the little margin of decrease in the exchange rate.
“It is upon the government to think of people like charcoal sellers, masons – those down in the economic ladder.
“Taxes are too high, so government should increase salaries. If the dollar rate reduces to SSP 35,000 or SSP25, 000, it can make sense,” said Doel.
Mayhelding Ahmed Beja, who sells electronics, said that they only move at the same pace as the dollar fluctuates.
“I charge $160 for this Infinix Hot 12 Play. If dollar rate against pound increases, I still charge $160, I don’t increase but it will just move together with the dollar rate at that time,” he said.
Beja claimed that prices might not fall any time soon due to the continued fluctuation of dollar-pound exchange rates.
“Dollar is still fluctuating, if you reduce prices now, and dollar rate increases again tomorrow, you will change the price again. This is why there is no change in the market,” he continued.
“Too much gossip”
It is a phenomenon that the economic advisor for the economic cluster, Dr Abraham Maliet Mamer, describes as ‘‘too much gossip” by the South Sudanese to control currency exchange rates, resulting in its fluctuation.
“First of all, let me assure you, the government did not do anything, as far as it is up to today, to address the dollar issue. As I said earlier, the dollar rate actually goes at an impulse. It is the gossip mode of the country that is controlling.”
According to Dr Maliet, the gossip is spread by what he called ‘‘uninformed informers’’ who spread rumours that the dollar rate might rise or fall, and the speculation triggers market dealers to raise the exchange rate.
“You know our people gossip a lot, which we call the ”uninformed informers.” They go and say the dollar is going to be like this so people will come and speculate. The actual need for dollars in our market has not actually been defined. How much exactly do we need every day needs study,” he added.
“You know people gossip, (that) dollar is coming down. These are gossips, they are the ones controlling the dollar but the government’s work to address the fluctuation of dollar, it’s not yet,”
He suggested that the economists need to meet with government officials and civil society to convene a conference to come up with devices of approaching inflation and fluctuating currency exchange rate.
“I was proposing that the government sit down and conduct…conference on why our economy is not picking up. We need to think about rebounding back. Now, it is on the table of the government. If they want to take it, they will take it,” the economist argued.
Pay salaries in banks
In August this year, Maliet called on the government to introduce salary payments in banks as well as the transfer of money to the neighbouring countries through banks so that enough dollars could be in the market to aid in stabilising exchange rates and lower inflation.
The economist further called on the two institutions to seek pieces of advice from economic experts to help up the deteriorating economy.