South Sudan's parliament orders reversal of currency devaluation

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South Sudan's parliament ordered the central bank on Wednesday to reverse Monday's devaluation of the local currency after prices jumped overnight, a central bank official said on Wednesday.

South Sudan, faced with a currency problem since it gained independence from Sudan in July 2011, devalued its pound by 34 percent late on Monday to bring it onto a par with the black market.

The central bank official said the new rate had swiftly led to a rise in prices at a time the costs of fuel, water, and imported food stuffs were already increasing sharply because of a shortage of supplies.

"Parliament wanted the rate put back, so it will be done tomorrow," said a central bank spokesman who declined to be named as he is only temporarily in the role.

The devaluation was part of reforms intended to bring the foreign exchange market into the formal economy in a bid to lower short-term volatility and provide more reliable access to foreign exchange, according to the central bank.

On Tuesday, the Bank of South Sudan had indicated the official exchange rate as one dollar to 4.5 pounds from 2.95 pounds before the devaluation.

"The adjustment had already made prices start to rise, the market had already been affected," the bank spokesman said.

Prices of imported goods on sale in the capital, Juba, were already rising sharply before the devaluation because heavy rains had flooded and blocked the main road to Uganda, a main trade route.

SOURCE: Reuters Nov. 13 2013: