South Sudan’s ministry of finance has stopped selling hard currency to the country’s central bank. The advent of armed conflict, which broke out in December 2013, has reduced the production of oil, the country’s main revenue earner by 32 percent, affecting the overall performance of the economy.
Subsequently, the value of the South Sudanese pound (SSP) continues to depreciate against major currencies such as the U.S dollar. This has led to the existence of two parallel exchange rates: the official rate set by the central bank and the black market rate.
At SSP 2.96 to the dollar, the official rate is way below the black market rate, which fluctuates between 15 and 18.6 to the U.S dollar. In essence, the competitive black market rate is attractive to businesses and individuals, which may partly explain the finance ministry’s decision to stop selling dollars to the central bank.
(The Sentry, an initiative of the Enough Project, seeks to disrupt and ultimately dismantle the networks of perpetrators, facilitators, and enablers who fund and profit from Africa’s deadliest conflicts.)