South Sudan currency strengthens after oil deal - Africa Review

A week after a new deal that paves way to the crucial resumption of oil flow, South Sudan's currency has strengthened further against the US dollar, hitting its highest so far on Saturday since the shutdown of oil production in January last year.

The pound was trading at 3.85 units against the dollar and 4.85 units against the Euro; a sharp appreciation compared to 4.3 and 5.2 units against the dollar and Euro respectively for the last few months.

However, the official rates remained fixed at 3.17 and 4.3 units against the dollar and Euro respectively at the Central Bank.

“I am selling all these dollars. Maybe I will make losses if the government is selling oil,” said Joseph Baal, a vendor trading in currencies at Custom suburb in Juba, pointing to bundles of US dollars on his makeshift table.

“There will be many dollars from the bank if oil is flowing in the pipeline,” said another, identified as Gatjal Bol.

The young country has been facing a shortage of hard currency after losing it shut off oil exports, which accounted for 98 per cent of its budget and nearly all foreign exchange earnings.

Sudan and South Sudan agreed last week on an implementation matrix for nine cooperation agreements signed in September in Addis Ababa, under the mediation of the African Union.

They include the resumption of oil exports via Port Sudan within two weeks.

In line with the matrix, Sudan has directed oil companies to transport South Sudan oil to the export terminal along the Red Sea coast, Sudan official news agency SUNA reported on Friday.

The monthly inflation rate has also dropped by 11.3 percentage points, from 38 per cent in January, to 26.7 percent in February.

“Over this period the prices of food and non-alcoholic beverages decreased by 16.0 per cent, the price of alcoholic beverages and tobacco decreased by 18.1 per cent and there was decrease in the cost of health [coverage] of 6.9 percent,” said Simon Nyang Anei, the director for economic statistics at the country’s National Bureau of Statistics.

“The decrease in the price of food and non-alcoholic beverages was mainly caused by lower fruit prices,” he added, echoing a data released for February Consumer Price Index.

However, “the figures are subject to volatility because of seasonal products entering and exiting the markets.”

South Sudan needs hard currency to import basic commodities from East Africa.