South Sudan sees pound rising after doubling dollar

Reuters , Saturday 22 Oct 2011

The new South Sudan pound is gaining against the dollar after doubling the monthly supply of foreign currency

South Sudan expects the South Sudanese pound to improve further after doubling the monthly supply of foreign currency to financial institutions, central bank officials said on Friday.

The currency of Africa's newest nation has sharply gained against the dollar on the black market this week, ending a slide since its launch after the country's independence in July.

South Sudan's main source of revenues and foreign currency is the sale of oil. It has contracted the sale of 22 million barrels worth $2.14 billion for the period July to October, according to the government.

On Friday, the pound was selling for 3.8 against the greenback on Friday, having traded over 4.2 a week ago, black market traders said in the capital Juba.

"We doubled (supply) last week and the impact is already clear. About five days ago the rate on the street was about 4.25," deputy central bank governor John Dor Majok told Reuters.

"Yesterday it fell to 4.0. We are expecting it to fall further which means that we expect this rate to fall to 3.6 in the middle of November," he said.

In total, the central bank said it plans to supply $200 millions to banks and exchange traders per month, up from $100 millions so far.

Majok blamed the previous decline of the pound on remittance transfers from foreign workers, speculators, profit flows from foreign investors and a temporary closure of the shared border with north Sudan.

"We also know that there are leakages at some of these banks and some of these forexes. Some of these forexes may direct some of this money to different purposes than the purpose we intend," Majok said.

He said the bank has sent officials and security agents to investigate malpractice at commercial banks and foreign currency offices.

Central Bank governor Kornelio Koriom Mayik said the central bank's foreign reserves were "healthy", but declined to give more details.

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