South Sudan wants to stop the pound weakening by setting an exchange rate target of 2.9-3.3 against the dollar and will intervene to ensure the currency stays in that band, a senior government official said on September 27.
The South Sudanese pound, which was introduced shortly after the country gained independence in July, has depreciated sharply due to a scarcity of dollars, sliding to more than 4 pounds per dollar on the black market.
To stem the slide, the central bank will supply dollars using funds from oil revenues, which are set to rise, deputy finance minister Marial Awou Yol told Reuters.
"(The) central bank will intervene from time to time to supply the market with dollars to ensure that the exchange rate remains stable," he said.
"(The) central bank has introduced a managed float where it has a lower band of 2.9 and an upper band of 3.3 South Sudanese pounds against the dollar," he said.
Previous attempts by the central bank to stabilise its currency have had little success due to a shortage of dollars in the economy.
He also said South Sudan had received around $500 million in oil revenue in August from the first supplies provided as an independent country a month earlier.
Previously South Sudan had shared oil revenues - the lifeline of its economy - equally with north Sudan, whose export facilities it uses for a fee both sides have yet to agree upon.
"It was in the region of $500 million," Yol said. "We hope that with winter coming and oil prices going up, we will receive a good amount of oil revenues."
South Sudan, an underdeveloped African country, expects annual inflation to fall by the end of the year after hitting 57 percent in August due to a leap in food prices.
"If our expectations are realised it will come down towards around 30-40 percent by the end of the year it will not exceed 50 percent," he said. "I believe there will be no threat from inflation in the short and medium term."