South Sudan: Pound foolish, Dollar Wise
4 min readLet’s say the Pound was devalued (political)
Deng Lueth Yuang, Canada
December 17, 2015 (SSB) — If South Sudanese pound (s£) was truly devalued, then it’s political! One, to make life difficult for those who think they have the means to do away with South Sudan, especially the political and business élite class.
Two, the children and families of the middle class will have no choice but to return to South Sudan and live side by side with the poor – to rebuild, and compete for and improve the little resources available. That’s economic growth through ‘indirect means’!
See the analogy of a barren land turning productive after residents got back to live on it ….
… And in the layperson’s language (psycho-social)
The layman in the civil service could not understand why ssp fall against world major currencies esp the US dollar. Here is a preview in South Sudanese context only:
~ the strength of pound depends on how much dollars flow into the country (mark my word – no economy here). The more dollars arrive today, the higher the demand for pounds,
– the more state and NGOs workers get paid in dollars,
– when more foreigners are coming to SS to put up shops for their needs,
– when oil prices shoot up, it means more dollars for the govt and public service
and Etc,;
Conversely, the pound gets pounded/fell when:
~ less dollars flow to the country meaning, anything that inhibit oil production, foreign workers job mobility and public service payments is a woe to pound. Take it this way – pound foolish, dollar wise.
Things like war in oil producing areas; falling oil prices; political upheavals; UN/western world sanctions;
Now the pound is foolish. Hence worthless! What are the short term repercussions? Here are they:
Individuals whether working or not:
– valueless salaries/incomes in dollars terms. If you used to earn more pounds, now it’s not;
~ higher prices for basic goods and services : for you to continue enjoying those things you used to have or wish, you must pay more for them;
~ no more trips abroad, rents, school fees, or luxurious life down there abroad. It’s time to come back home.
Businesses (traders and financials)
~ assets values plunged
~ profits fall
~ high costs of operations in the country
~ high supply costs from other countries
etc…
To the government
~ more revenues with low purchasing power elsewhere
~lower business confidence meaning the ease and profitability of doing business here is unpleasant
~ hyperinflation- SS going Zimbabwe and Argentina way
~ civil disobedience- masses revolting against the govts, crimes rate/ higher number of unknown gunmen/women targeting the affluent
~ more rebellions – if you can’t be bought with more dollars, it’s feasible to remain in the bush and live the ‘Magendo’ ways
Floating rate was something that should have been done during the good years, not now when the country fabric is broken. It could have been a better decision by then. But now the country has a high hill to climb in order to see the undergrowth – the unknown, unseen grass crawling underneath…
Take it or leave it for now, it’s good in the long term. It is a scare to your pocket, but persevere. Things will be alright!
Deng Lueth Yuang has a Master’s degree in Financial/Monetary Economics. @Facebook.Com. Not a journalist but an opinators on topical issues affecting South Sudanese peoples.
The opinion expressed here is solely the view of the writer. The veracity of any claim made are the responsibility of the author, not PaanLuel Wël: South Sudanese Bloggers (SSB) website. If you want to submit an opinion article or news analysis, please email it to paanluel2011@gmail.com. SSB do reserve the right to edit material before publication. Please include your full name, email address and the country you are writing from.
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