JUBA – South Sudan’s central bank on Wednesday said it is reducing the auction of foreign currency from $20 million to $10 million weekly after the pound gained strength against the dollar.
Johnny Ohisa Damian, Governor of the Bank of South Sudan (BOSS) said the bank has decided to limit the number of weekly auctions to commercial banks and forex bureaus citing the appreciation of pounds against the U.S dollar in the market.
“The Auction Supervisory Committee unanimously decided to reduce the weekly auction amount to USD 6 million for Commercial Banks and USD 4 million for Forex Bureaus down from USD 12 million and 8 million dollars per week respectively,” Ohisa said in a statement issued on Wednesday.
Ohisa said the decision to reduce auction was based on Auction Supervisory Committee bids analysis.
“This decision was based on the auction supervisory committee bids analysis, and the trend of the foreign exchange market development which indicates that the market is liquid and doesn’t need additional dollars,” said Ohisa
He revealed that the pounds appreciated against the dollar by 9.4 percent on average from 695.5 dollars on August 4th to the current 635 dollars this month.
“It was also noted that the sharp currency depreciation has been reversed and South Sudanese Pounds appreciated by 9.4 percent on average from 695.5 U.S dollar on August 4, 2022, to 635.0 dollars on September 28th, 2022, and is continuing to strengthen against the United States of America dollar, a noticeable positive impact on the foreign exchange market,” he said.
He disclosed that the growth in broad money decreased by 4.7 percent last month compared to the growth rate of 56.59 percent in July this year.
“The Bank of South Sudan is keening monitoring the development and will continue to revise the amount of forex exchange guided by the market forces to meet the foreign exchange demands of the business fraternity.”
In August the central bank had increased the weekly auctioning of hard currency in a bid to mop up excess liquidity as the pound increasingly lost ground against the dollar.
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The auction won’t solve anything and in fact it will make local currency depreciate further. The central bank would have cut the money growth rate to reduce the broad money and increases the money base and release more foreign currency into the market.