South Sudan says it will ban use of foreign currency to prevent further depreciation

JUBA – South Sudan’s central bank said Friday that it planned to ban the use of foreign currency nationwide to prevent further depreciation of the South Sudanese pound against the U.S. dollar after prices of food and other basic commodities have skyrocketed in recent weeks and months, the VOA reports.

Juba resident Saida Juan said prices were higher each time she headed to the market. The mother of seven said a kilo of meat, which sold for 700 South Sudanese pounds a few months ago, now costs 2,500 South Sudanese pounds, an increase that means her family can afford to eat only green vegetables these days.

She called on government officials to do everything in their power to stabilize prices.

“Traders selling goods in the markets have been blaming the price hikes on the increase in the exchange rate of the South Sudanese pound and the U.S. dollar. My message to our leaders is that they should try by all means possible to not allow foreign currency to dominate our markets, because the dollar is not our currency. We are really suffering,” Juan told South Sudan in Focus.

On Thursday, the Business Committee of South Sudan’s National Assembly summoned Bank of South Sudan Governor Gamal Abdallah Wani, Finance Minister Salvatore Garang Mabior, and Erjok Bullen, deputy commissioner of the National Revenue Authority, to answer questions about the depreciation of the South Sudanese pound.

Wani attributed the country’s high inflation rate to the 62% drop in international oil prices, ongoing violence in parts of the country, and increased military spending.

South Sudan earns only $4 to $6 per barrel of crude today, or $30 million a month. In 2011, South Sudan earned $900 million a month from oil exports.

Wani told the committee the Bank of South Sudan would issue new regulations banning the use of foreign currency, adding “everybody is carrying foreign currency illegally.”

Government-approved exchanges should be the only entities exchanging pounds for dollars, Wani said.

“That is why we need the national payment system, because we don’t know how much is going out in terms of the outflow and we don’t know how it is coming in terms of the inflows. The outflows, 50 million, hundreds of millions, what is it for? Is it to buy weapons to come and overthrow the government, or what is it for?” Wani told the committee.

On Friday, the exchange rate was $1 for 500 pounds on South Sudan’s black market.

The official rate hovered just above $1 to 55 pounds.