South Sudan increases interest rate to address currency depreciation

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Bank of South Sudan (BOSS)
The gate of South Sudan Central Bank

The Bank of South Sudan, the central bank of the country, on Thursday increased the interest rate by 3 percent to 15 percent to prevent depreciation of the South Sudanese pound (SSP), the local currency, and inflationary pressure.

Johnny Damian Ohisa, governor of the central bank, said it is taking additional swift and appropriate policy measures in tightening the monetary policy condition by controlling growth in broad money.

“The Central Bank will increase the interest rate by 300 basis points from 12 percent to 15 percent, this will encourage commercial banks and even those who have money outside to come and invest in the term deposit that the central bank is offering,” Ohisa told journalists in Juba, the capital of South Sudan.

Over the last few days, the local South Sudanese pound (SSP) traded to a record low to the U.S. dollar from 820 (SSP) to 920 (SSP) to a dollar, causing a sharp rise in imported commodities in the market.

Ohisa said among some of the swift measures they have taken to address the crisis are to maintain the growth in broad money at about 11 percent and headline inflation at 8 percent and also to lift all restrictions on the frequency of the deposit by the commercial banks with immediate effect.

He said the central bank will introduce with immediate effect, a cash-based Auction whose proceeds will be paid in cash rather than debiting book value in which eligible forex dealers will deposit physical cash into the central bank.

Ohisa faulted the sharp depreciation of the SSP against the U.S. dollar on the Russia-Ukraine conflict, the Fed Reserve tightening of its monetary policy, and banking crises in the U.S. that have led to the loss in value of major currencies. He also blamed the increase in prices of imported goods on a major trading partner like Uganda whose prices rose by more than 50 percent in January. Enditem

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