Businesses in the commercial city of Puntland have in recent days rejected use of the Somali shilling for transactions to avoid making losses due the depreciation of the Somali shilling against the US dollar.
Last week, Puntland Government issued a controversial decree on the collection of import-export duties only being made in US dollars.
The decision sparked protests in areas in Galka’yo, Bosaso and Garowe.
Local businesses repriced their goods on the basis of the market exchange rate, switched to US dollars for transactions, and further fueled the exchange rate-driven inflation in Puntland.
Some businesses in Bosaso are not open for business today, whereas others have hoarded their wares.
At the Bosaso meat market, the supply of meat and sale of goats for local consumption has dwindled since meat sellers and livestock traders have opted for to dollar-based transactions.
On Sunday the Puntland Government set the exchange rate without injecting dollars into currency exchange markets in Puntland.
“(The) Puntland Government can set the exchange rate only if it can assume the role of a bureau de change. The exchange rate decision is a wild-eyed dream, and forms the third, parallel exchange rate in place in Puntland” a Bosaso-based economist told the Puntland Post.
The Somali shilling printed by Puntland is now worth less than the Somali shilling used in other parts of Somalia.
This article first appeared in the © Puntland Post, 2020 and is republished with permission.