With a view to restore order and boost confidence in the money markets, the Bank of South Sudan (BoSS) on 15th December 2015 dropped the fixed exchange rate regime in favor of the floating system in which the value of the South Sudanese Pound against USD is determined by the prevailing market forces. This effectively devalued the currency overnight with the official rate moving from the previous SSP/USD 2.96 to 18.5, the then going rate in the parallel black market.
While it is premature to gauge the full impact of current exchange rate system on the flow of trade and prices of commodities, this paper attempts to analyze the likely short to long-term implications of the foreign exchange policy change, taking into account the current known variables like the low foreign reserves levels and the fact that typically, devaluation essentially leads to increased prices of imports as well as processed commodities including foods since substantive amounts of processing raw materials are imported.