Issued 17 December,

Market and Trade

In the first half of the year, the Somali Shilling (SoSh) showed a fluctuating trend against the US dollar (USD) appreciating by an average of 8% in Jan.-Mar. ’09 and devaluing again in Apr.-July ’09 (3%). However, in the second half of the year SoSh began to appreciate and by Nov. ’09 gained 4-8% in value in most markets. For instance, in Mogadishu main Bakaara market, one USD was exchanged for SoSh 31,840 in Nov. ’09, which is an approximate 5% increase in value since July ’09. The current value of SoSh across different markets is 2-8% greater compared to its levels in Nov. last year. However, the level of depreciation of SoSh is still high compared to the 5-year average (2003-2007), ranging between 80-90% across most markets of southern Somalia.

The Somaliland Shilling (SlSh) has lost 11% of the value in the first half of the year but recovered during July-Aug. ’09. After resuming devaluation in the following two months (Sep-Oct. ’09) the currency appreciated again in Nov. ’09 returning to its levels at the start of 2009. The current value of SlSh, which was traded in Nov. ’09 for 6,400 SlSh/USD at Hargeisa market, is comparable with the 5-year average (2003-2007). The recent appreciation of SoSh and SlSh is attributable to the increased livestock export during Hajj.

 Import Commodity Prices
The supply of imported commodities increased since the last reporting period (Jul.- Sept.’09) due to the end of monsoon season. Therefore, the prices of major import commodities, including red rice, sugar, vegetable oil and fuel, remained relatively stable in most markets of the Somali Shilling areas. The exceptions are Shabelle regions and the Somaliland Shilling areas where vegetable oil price increased by 17% in the last 2 months although the highest price on this commodity was recorded in central regions. During the same period, price declines were observed in the northwest for sugar (10%), petrol (10% each) and rice (14%), after moderate increase during July-Sep. ’09 (see FSNAU Quarterly Brief for Nov. '09).

Overall, the prices of all commodities in Somali Shilling areas are considerably higher (107 - 235%) compared to the Nov. 5-year average levels. The same applies to Somaliland Shilling areas (20-80%), with rice prices showing the highest percent increase. It is expected that the import commodity prices will reduce slightly in the coming months as the volume of imports is likely to increase due to expected growth in livestock exports following the recent lifting of Saudi Arabia’s livestock export ban (see Livestock sector).