South Sudan currency takes hit over border crisisBy MACHEL AMOS in Juba | Wednesday, April 25 2012 at 15:22
South Sudan’s locally currency has devaluated further against the US dollar, hitting a record low since independence.
As the new country faces off in a deadly border crisis with Sudan, it's currency, the South Sudan Pound, was exchanging at 4.8 units to the dollar on Wednesday in the black market.
This is a significant fall in value from last month, when $1 was selling at 4.2 units in the black market.
Businessmen say the dollars have become scarce three months after the infant nation shut down its oil production due to what it said was theft and diversion of its oil entitlements en route to the export terminal at Port Sudan.
South Sudan relies 98 per cent on oil to meet its budgetary obligations. Oil is also the only foreign exchange earner for the country.
However, the central bank, which reduced supply to forex bureaus and commercial banks when oil export was shut, said the official rate is constant at 2.95 units against $1.
“We are keeping that rate constant until we review it. We supply dollars for health, education and food items,” an official from the central bank said.
Businessmen insist some bank officials are trading on the dollars, smuggling it into the black market or selling in at a rate of 3.5 to prospective clients with whom to share profit -- a claim the official denied.
The Kenya Commercial Bank (KCB) sells one dollar for 3.05 South Sudan Pounds.
The inflation rate has shot up from 42 per cent in February to 50 per cent in March, according to the National Bureau of Statistics.
Mr David Chan Thiang, the Director for Economic Statistics at the bureau said “this is all about the austerity budget” introduced last month, in which the government cut down on the expenditure and prioritized proper management of existing hard currency reserves.
“When you have scarcity of forex in the market, it is difficult to bring goods from outside,” Mr David said, referring to the rise in inflation.
The scarcity of the dollars, which has led to the fall in the value of the pounds, has caused shortage of fuel.
Several cars could be seen lined up at fuel stations Wednesday to fill their empty tanks.
At one station next to the government secretariat, the line spilled onto the main road and snaked along it to a roundabout at parliament.
“I think it will continue unless something is done,” said Mr Chan.
The Consumer Price Index for fuel shot up from 20 per cent in February to 29 per cent last month, according to data from the bureau.
Earlier, Petroleum and Mining minister Stephen Dhieu Dau said the shortage of fuel was due to delay in clearance at a checkpoint in Nesitu, a few miles from the capital Juba.
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