As of May 22, 2023, one U.S. dollar trades at 1,000 South Sudanese pound in the Forex market. | Photo: Courtesy.

The Bank of South Sudan said on Friday it has observed that the United States dollar is “modestly” strengthening against local currency due to the recent payment of civil servant’s salary.

Central Bank Governor Dr. James Alic Garang said the public sector pay rise may potentially lead to adverse consequences, likely to be evidenced in commodity prices level.

Dr. Garang said the Bank would work with the Ministry of Finance and Planning and relevant financial institutions to address the concern and ensure macroeconomic stability.

“As we approach the last quarter of 2023, the Bank of South Sudan has observed the modest strengthening of US Dolars again the South Sudanese Pound over the last one week, due to public sector pay rise,” Dr. Garang told journalists at the Bank headquarters in Juba.

“The pay rise may pose a potential risk in growth of broad money which could potentially lead to adverse ramification in general prices level.”

Garang said the Central Bank has undertaken several measures to contain the rising exchange rate.

This include increasing the amount of hard currency auctioned to Forex and commercial banks as well as tightening monetary policies.

“The bank will continue with tightening monetary policy stance while maintaining the 10% target for the money growth in broad Money,” he said.

“We will do so by maintaining the central bank interest rate at 15% until further notice. Third, increasing the volume of the weekly foreign exchange auction, and the last point that I would like to add on this specific polices measures, is that we will continue to strengthen policy coordination with fiscal authorities.”