The Somali shilling (
sign
A sign is an object, quality, event, or entity whose presence or occurrence indicates the probable presence or occurrence of something else. A natural sign bears a causal relation to its objectโfor instance, thunder is a sign of storm, or me ...
: Sh.So.; so, shilin; ar, ุดูู; it, scellino;
ISO 4217
ISO 4217 is a standard published by the International Organization for Standardization (ISO) that defines alpha codes and numeric codes for the representation of currencies and provides information about the relationships between individual cu ...
: SOS) is the official
currency
A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins.
A more general def ...
of
Somalia
Somalia, , Osmanya script: ๐๐๐๐๐๐๐๐; ar, ุงูุตูู
ุงู, aแนฃ-แนขลซmฤl officially the Federal Republic of SomaliaThe ''Federal Republic of Somalia'' is the country's name per Article 1 of thProvisional Constituti ...
. It is subdivided into 100 ''senti'' (Somali, also ), ''cents'' (English) or (Italian).
Overview
Early history
The
shilling
The shilling is a historical coin, and the name of a unit of modern currencies formerly used in the United Kingdom, Australia, New Zealand, other British Commonwealth countries and Ireland, where they were generally equivalent to 12 pence o ...
has been the currency of parts of Somalia since 1921, when the
East African shilling was introduced to the former
British Somaliland
British Somaliland, officially the Somaliland Protectorate ( so, Dhulka Maxmiyada Soomaalida ee Biritishka), was a British Empire, British protectorate in present-day Somaliland. During its existence, the territory was bordered by Italian Soma ...
protectorate
A protectorate, in the context of international relations, is a State (polity), state that is under protection by another state for defence against aggression and other violations of law. It is a dependent territory that enjoys autonomy over m ...
. Following the 1960 independence and unification of the former territories of
British Somaliland
British Somaliland, officially the Somaliland Protectorate ( so, Dhulka Maxmiyada Soomaalida ee Biritishka), was a British Empire, British protectorate in present-day Somaliland. During its existence, the territory was bordered by Italian Soma ...
and
Italian Somaliland
Italian Somalia ( it, Somalia Italiana; ar, ุงูุตูู
ุงู ุงูุฅูุทุงูู, Al-Sumal Al-Italiy; so, Dhulka Talyaaniga ee Soomaalida), was a protectorate and later colony of the Kingdom of Italy in present-day Somalia. Ruled in the 19th centur ...
, their respective currencies, the East African shilling and
somalo
The Somalo (plural: Somali, ุตูู
ุงูู) was the currency of the Trust Territory of Somaliland administered by Italy between 1950 and 1960. The "Somalo" remained officially in use in the newly created Somali Republic until 1962. It was subdivided ...
(which were equal in value) were replaced at par in 1962 by the Somali shilling. Names used for its denominations were cent (singular: centesimo; plural: centesimi) and ุณูุช (plural: ุณูุชูู
ุงุช), along with shilling (singular: scellino; plural: scellini) and ุดูู.
Banknotes
On 15 October 1962, the Banca Nazionale Somala (National Bank of Somalia) issued notes denominated as 5, 10, 20 and 100 scellini/shillings. In 1975, the ''Bankiga Qaranka Soomaaliyeed'' (Somali National Bank) introduced notes for 5, 10, 20 and 100 shilin/shillings. These were followed in 1978 by notes of the same denominations issued by the ''Bankiga Dhexe Ee Soomaaliya'' (
Central Bank of Somalia
The Central Bank of Somalia (CBS) ( so, Bankiga Dhexe ee Soomaaliya, ar, ุงูุจูู ุงูู
ุฑูุฒู ุงูุตูู
ุงูู) is the monetary authority of Somalia. Somalia has struggled to reestablish a functioning state since the collapse of an autho ...
). 50 shilin/shillings notes were introduced in 1983, followed by 500 shilin/shillings in 1989 and 1000 shilin/shillings in 1990. An attempt was made in 1990 to reform the currency at 100 to 1, with new banknotes of 20 and 50 new shilin prepared for the redenomination.
Coins
Initially, the coins in circulation were those of the East African shilling and somalo currencies. In 1967, coins were issued in the name of the Somali Republic in denominations of 5, 10 and 50 cents/centesimi and 1 shilling/scellino. In 1976, when Somali names for the denominations were introduced, coins were issued in the name of the
Somali Democratic Republic
The Somali Democratic Republic ( so, Jamhuuriyadda Dimuqraadiya Soomaaliyeed; ar, ุงูุฌู
ููุฑูุฉ ุงูุฏูู
ูุฑุงุทูุฉ ุงูุตูู
ุงููุฉ, ; it, Repubblica Democratica Somala) was the name that the socialist military government gave to Som ...
for 5, 10 and 50 senti and 1 shilling.
Modern history
Pre-civil war
The shilling was pegged to
sterling at a rate of 20 shillings to ยฃ1 stg. In 1967, it switched its peg to the
U.S. dollar
The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...
on 18 November 1967, when sterling was devalued, giving an implied exchange rate of 1 dollar = 7.14286 shillings. On 28 August 1971, with the collapse of the
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreement. The Bretto ...
, the shilling was valued at 0.124414 grams of gold. On 23 December 1971, it was repegged to the U.S. dollar, this time at a rate of 1 dollar = 6.57895 shillings. The shilling was devalued by 5% to 1 dollar = 6.92522 shillings on 8 January 1972. On 24 February 1973, the peg to the dollar became 6.23272 shillings.
A dual rate system was established on 30 June 1981, with an official rate of 6.295 shillings to the U.S. dollar and a second exchange rate of 12.4654 to 12.7146 shillings to the dollar.
Somali currency underwent several devaluations:
*1 July 1982: Peg with the
SDR = 16.50 shillings (ยฑ7.5 band on 1 July 1983)
*15 September 1984: Peg with the USD = 26 shillings (official rate)
*1 January 1985: Peg with the USD = 36 shillings (official rate)
*30 June 1985: Peg with the USD = 40.6083 shillings (official rate)
*2 November 1985: Peg with the USD = 42.50 shillings (official rate)
*Somali shilling was devalued from 54.50 SOS/USD to 90.50 SOS/USD during 1986. There were multiple exchange rates.
*12 October 1987: Peg with the USD = 100 shillings (official rate)
*By 29 December 1989, a U.S. dollar was exchanged for 924 shillings, in which it skyrocketed to 3,470 shillings by the end of 1990.
Unregulation
Following the breakdown in central authority that accompanied the
civil war
A civil war or intrastate war is a war between organized groups within the same state (or country).
The aim of one side may be to take control of the country or a region, to achieve independence for a region, or to change government policies ...
beginning in the early 1990s, the value of the Somali shilling plunged. The Central Bank of Somalia, the nation's monetary authority, also shut down operations. Rival producers of the local currency, including autonomous regional entities such as the
Puntland
Puntland ( so, Puntland, ar, ุฃุฑุถ ุงูุจูุท, it, Terra di Punt or ''Paese di Punt''), officially the Puntland State of Somalia ( so, Dowlad Goboleedka Puntland ee Soomaaliya, ar, ููุงูุฉ ุฃุฑุถ ุงูุจูุท ุงูุตูู
ุงููุฉ), is a F ...
territory, subsequently emerged. These currencies included the Na shilling, which failed to gain widespread acceptance, and the Balweyn I and II, forgeries of pre-1991 bank notes. Competition for
seigniorage
Seigniorage , also spelled seignorage or seigneurage (from the Old French ''seigneuriage'', "right of the lord (''seigneur'') to mint money"), is the difference between the value of money and the cost to produce and distribute it. The term can be ...
drove the value down to about $0.04 per ShSo (1000) note, approximately the commodity cost. Consumers also refused to accept bills larger than the 1991 denominations, which helped to stop devaluation from spiraling further upwards. The pre-1991 notes and subsequent forgeries were treated as the same currency. It took large bundles to make cash purchases,
and the
United States dollar
The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...
was often used for larger transactions.
Regulation
In the late 2000s, Somalia's newly established
Transitional Federal Government
The Transitional Federal Government (TFG) ( so, Dowladda Federaalka Kumeelgaarka, ar, ุงูุญููู
ุฉ ุงูุงุชุญุงุฏูุฉ ุงูุงูุชูุงููุฉ) was internationally recognized as a provisional government of the Republic of Somalia from 14 October ...
revived the defunct
Central Bank of Somalia
The Central Bank of Somalia (CBS) ( so, Bankiga Dhexe ee Soomaaliya, ar, ุงูุจูู ุงูู
ุฑูุฒู ุงูุตูู
ุงูู) is the monetary authority of Somalia. Somalia has struggled to reestablish a functioning state since the collapse of an autho ...
. The monetary authority assumed the task of both formulating and implementing monetary policy.
Owing to a lack of confidence in the Somali shilling, the U.S. dollar was widely accepted as a medium of exchange alongside the Somali shilling.
Dollarization
Currency substitution is the use of a foreign currency in parallel to or instead of a domestic currency. The process is also known as dollarization or euroization when the foreign currency is the dollar or the euro, respectively.
Currency subs ...
notwithstanding, the large issuance of the Somali shilling increasingly fueled price hikes, especially for low-value transactions. The new Central Bank of Somalia expects this inflationary environment to come to an end as soon as the Central Bank assumes full control of monetary policy and replaces the presently circulating currency introduced by the private sector.
With a significant improvement in local security, Somali expatriates began returning to the country for investment opportunities. Coupled with modest foreign investment, the inflow of funds helped the Somali shilling increase considerably in value. By March 2014, the currency had appreciated by almost 60% against the U.S. dollar over the previous 12 months. The Somali shilling was the strongest among the 175 global currencies traded by
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, rising close to 50 percentage points higher than the next most robust global currency over the same period.
The United States dollar is still the main currency used in Somalia, with it being most prolific in electronic payments using SMS like EVC Plus.
Historical exchange rates
Free-market rates in Somalia:
*2,000 SOS/USD in June 1991
*5,000 SOS/USD in June 1993
*13,400 SOS/USD in March 2006
*14,406 SOS/USD in August 2006
*15,000 SOS/USD in February 2007
*25,000 SOS/USD in March 2008
*35,000 SOS/USD in July 2008
*28,250 SOS/USD in March 2009
*33,300 SOS/USD in February 2010
*27,000 SOS/USD in October 2011
*19,000 SOS/USD in December 2012
*15,000 SOS/USD in May 2013
*20,000 SOS/USD in March 2014
*22,000 SOS/USD in December 2014
*23,000 SOS/USD in April 2015
See also
*
Economy of Somalia
Somalia is classified by the United Nations as a least developed country, with the majority of its population being dependent on agriculture and livestock for their livelihood. The economy of Somalia is $49.918 billion by gross domestic product ...
*
British currency in the Middle East
The history and development of British currency in the Middle East emerged from the 19th century. British involvement in the Middle East began with the Aden Settlement in 1839. The British East India Company established an anti-piracy station in Ad ...
Notes
References
CIA World Factbook - ''Somalia''*
*
*
External links
{{Portal bar, Africa, Money, Numismatics, Somalia
Currencies of Somalia
Currencies introduced in 1962