Experts spell doom on BoSS US$8m weekly dollar auction

The Central Bank of South Sudan has upped the supply of US dollar to curb the scarcity that has impacted market prices in South Sudan, by increasing weekly auctioned amount from US$5 million to US$8 million.

The move is expected to increase the impacts for the previous efforts that had seen BoSS auction US$5 million to both commercial bank and forex bureaus, leading to a slight reduction in exchange rate in the country.

“We have been observing that situation (dollar scarcity) in the past few days and we felt as the Central Bank that the current trend can be addressed…if there is more demand then what we can do is to address that gap. And therefore, we have decided to start immediately from next week to increase the amount that we are auctioning,” said Dier Tong Ngor, the governor of Central Bank of South Sudan.

Since March 2021, the bank has been auctioning 5 million US dollars per week, amounting to millions of dollars floating the markets, but market prices continue to increase daily.

No impact

Some economists have however warned that the move would not solve economic crisis of the country, but rather could lead to hyperinflation.

According to Dr. Abraham Matoc Dhel, Vice Chancellor of Dr. John Garang University, the move would not address economic crisis; but could instead enrich few speculators who control the market.

The economic expert also urged that without circulation of money, it would be very difficult for the country to stabilise it economy.

“The market has been controlled by the speculators and these speculators buy the dollars and they hoard it-it does not circulate. It is a matter of making the dollar as a commodity rather than a medium of exchange as it is expected to be. In economic terms, money is useful when it is invested or when it is circulated.”

“Still this money will go into the hands of speculators who control the market and this will not have an impact on the prices in the market,” added Dr. Matoc.

But Mr. Tong maintained that South Sudan’s economy would soon stabilise as the Central Bank continues to avail enough dollars, warning that those who buy and hoard dollars would one day lose their money.

“With the auction and the reform that we are doing now, we are also addressing that (black market dealers) because those who are hoarding dollars. If we continue to supply dollars to the market, definitely the exchange rate will stabilise and pound will gain strength,” said Tong.

He said the bank’s main aim was to unify the exchange rate.  “Multiple rates are not good for the economy [and] that is why we are introducing this reform with ultimate goal that we want to unify the exchange rate.”

Over the past weeks, there has been fluctuation in parallel exchange rate between 450 and 470 SSP per a dollar while the South Sudan Central Bank’s rate stands at 2.96.