The governor of the Bank of South Sudan (BOSS) on Tuesday announced that the Central Bank will reduce the amount of U.S Dollars auctioned to commercial banks and forex bureaus by 50 percent.
BOSS has been auctioning USD 6 and 4 million respectively to commercial banks and forex bureaus weekly.
In a statement dated 14 November, BOSS Governor Jonny Ohisa Danian said the decision was based on the successful implementation of the monetary policy instrument, the Term Deposit Facility (TDF) auction, which operates similar to currency auction.
“With the new instrument, the BOSS auctions SSP 8 billion biweekly which has significantly contributed to the decline in growth of money supply to a desirable target of a single digit,” he said.
The governor revealed that the TDF is currently performing well and has become a key instrument in steering short-term market rates and management of excess liquidity, encouraging banks to focus on their mandate of financial intermediation to promote a savings culture and provide credit to the private sector.
He said that according to microeconomics indicators, inflation continues to be moderate, growth in broad money has stabilized and the policy target decreased by 2.6 percent in September as compared to the growth rate of 4.6 percent in August.
According to Governor Ohisa, South Sudan is aware of the slight strengthening of the US dollar against all major currencies including the SSP following the U.S Federal Reserve Bank’s recent hike of its interest rate which is intended to cure unprecedented inflation in the U.S economy.
“We are also aware of the increased demand for forex by both businesses and individuals due to the approaching Christmas and New Year festive seasons,” he said. “BOSS will keenly monitor this development and will continue to revise the amount of forex auctioned, guided by the market forces to meet the foreign exchange demand by the business fraternity.”