South Sudan Adopts Floating Exchange Rate

By Jok P Mayom

JUBA 15 December 2015 [Gurtong] – “The regulation on fixed exchange rate regime issued today and all related circulars and guidelines are hereby repealed and adoption of floating exchange rate regime” said Kornelio Koriom Mayik, Governor of Bank of South Sudan.

Koriom said, “Effective from Tuesday 15th December 2015, all foreign exchange business shall be transacted at market determined exchange rate.”

“The bank of South Sudan shall introduce U.S dollars purchase and sale auction occasionally” he said.

According to the Governor, floating exchange rate will offer macro-economic advantages such as easy access to foreign exchange by the business community and members of the pubic and help to build reserves.

He said, it will also eliminate multiple exchange rates, minimize rent-seeking behavior and reduce exchange rate volatility in the medium and long-terms.

“It will encourage inflows of foreign direct investment (FDI), job creation that can drive economic growth and develop” Koriom said.

However, Koriom said the stability of the exchange rate under the proposed reforms, may be difficult to maintain in the short run without availability of adequate foreign exchange reserves.

The order comes following the directives from the Ministry of Finance and Economic Planning after being directed by the government to regulate polices to curb looming economic crisis in the country.

Hon. David Deng Athorbei also on his part said, “I am today announcing important measures to reform our exchange rate policy. Therefore, immediately as from midnight the current fixed exchange rate of SSP against U.S dollar will be abandoned, instead the determination of the value of our pound will be based on the market forces.”

According to the Minister of Finance Hon. Athorbei, on the exchange rate reforms, “The BoSS is directed to take necessary measures that will ensure the success of the new policy.”