Somali shilling

Evolution of the SOS Exchange Rate

The Somali shilling (SOS) exchange rate has experienced significant fluctuations over the years. Since the collapse of the Somali state in 1991, the country's currency has been highly unstable. In the early years, inflation and political instability caused rapid depreciation of the SOS against major currencies like the US dollar and the Euro. The exchange rate in this period was characterized by wild swings and lack of transparency.

Variations in the SOS Exchange Rate

The Somali shilling has faced continuous depreciation against major currencies due to factors such as political instability, shortage of foreign exchange reserves, corruption, and limited access to global financial markets. However, variations in the exchange rate have not followed a consistent pattern, as it is often influenced by short-term economic and political developments within Somalia.

Significance of SOS in the Global Economy

The Somali shilling is not widely recognized in the global economy as it is not a convertible currency. It is primarily used within Somalia and is not accepted for international transactions. The lack of stability and infrastructure for trading the SOS hinders its role in global financial markets.

Shocks Experienced by SOS and Correlation with Other Currencies

The Somali shilling has been subject to various shocks throughout its history, including political unrest, civil war, droughts, and economic instability. These shocks have further exacerbated the depreciation and volatility of the SOS exchange rate. Given the limited integration of the Somali economy with the global economy and the low correlation of the SOS with other major currencies, the impact of these shocks on global financial markets is minimal.