Effect of Foreign Exchange Reserves and Money Supply on Exchange Rate in South Sudan
Abstract
Since the establishment of the Central Bank of South Sudan in 2011, monetary policymakers have been changing their policy instruments over the years in an attempt to stabilise the country’s economy. This study investigated the effect of foreign exchange reserves and money supply on the exchange rate in South Sudan over the period 2012 to 2019. Empirical studies of the effect of foreign exchange reserves and money supply on the exchange rate are reviewed in both developed and developing countries. Annual data from the World Bank Economy Statistics Database was analysed using an advanced pivot table. The findings of this study indicate that a decrease in foreign exchange reserves causes a depreciation in the exchange rate. The results also confirm that an increase in money supply causes depreciation in the exchange rate. The findings are in line with the findings of all the empirical studies that are reviewed in this paper.
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