Samson: The Central Bank of Sudan decides to float the pound to address the effects of the economic crisis
21st February, 2021
The Central Bank of Sudan announced, on Sunday, the unification of the exchange rate of its local currency, the pound against the US dollar and foreign exchange, starting today, in an attempt to eliminate economic and monetary imbalances.
The Sudanese Central Bank said, in an official statement today, that “the decision to partially float the currency aims to unify and stabilize the exchange rate, transfer resources from the parallel market to the official market, and attract remittances from Sudanese working abroad through official channels.”
“The decision will contribute to the normalization of relations with regional and international financing institutions, in order to ensure attracting flows of grants and loans from these bodies and stimulating producers, exporters and the private sector by giving them an acceptable exchange rate,” the bank stressed.
“The unification of the exchange rate will limit smuggling of goods and currencies, and fill the gaps to prevent speculators from benefiting from a gap between the official price and the price in the parallel market,” he added.
The decision is intended to mean that the Central Bank will have full powers to intervene in the exchange rates in the event that they exceed a ceiling set by it.
Sudan suffers from renewed crises in bread, flour, fuel and cooking gas, as well as a continuous deterioration in its national currency, and a steady rise in inflation rates. And last week, Sudanese data showed that the country’s annual inflation rate rose to 304.33 percent in January, from 269.33 percent in the previous December. LINK
Samson: The Sudanese Central Bank unifies the pound exchange rate
21st February, 2021
The Central Bank of Sudan announced that it had issued instructions to banks to unify the official and parallel exchange rate, starting from Sunday, in a move expected to lead to a significant devaluation of the pound
Recently, the price of the dollar reached between 350 and 400 Sudanese pounds on the black market, compared to an official price of 55 pounds
According to Reuters, the Central Bank’s letter of instructions to banks said that it would set a daily basic price based on the market price between banks and the role of exchange, and the instructions oblige banks to declare an exchange rate within a range of 5% more than the central bank rate based on market supply and demand, and not more The profit margin between the buying and selling rates is about 0.5%
The central bank did not clarify the rate at which the exchange rate was decided to be unified, but analysts say that unification practically means moving to the parallel market price, given that almost all transactions are calculated at that price, according to Reuters
The bank said in a statement: The Sudanese economy has been suffering from structural imbalances, exemplified by the internal imbalance, including, for example, the high state budget deficit, and the external imbalance, which is the high balance of payments deficit. Continuous exchange rate of the local currency against foreign currencies
The Sudanese Central Bank continued that these imbalances deepened after the secession of South Sudan and the departure of most of the oil reserves to the State of South Sudan, and the continued security, political and economic instability with the continuation of the American economic embargo and the presence of the name of Sudan in the American list of countries sponsoring terrorism, and the resulting difficulties and complications in correspondence relations. The foreign exchange of Sudanese banks and the decline in foreign exchange flows, and the country could not benefit from international initiatives for debt relief, such as the Heavily Indebted Poor Countries Initiative, known as HIPC
The Central Bank of Sudan said: Now that we are looking towards a new phase as a result of political developments after the glorious December revolution and the signing of the Juba Peace Agreement, and within the framework of openness to the outside world after removing Sudan from the list of countries sponsoring terrorism, it is imperative to reconsider all the state’s economic policies to conform to these requirements. This stage, in order to help achieve economic stability, and to address these imbalances required full coordination and cooperation between the relevant authorities
Reform of the exchange rate system
The Central Bank of Sudan revealed that the transitional government’s opinion has settled on adopting a package of policies and measures aimed at reforming and unifying the exchange rate system by adopting a flexible and administered exchange rate system
In this context, publications and regulations of the Central Bank of Sudan were issued directed to banks and exchange companies to implement the reform vision of the state as of Sunday, February 21, by unifying the exchange rate in a way that contributes to achieving the following:
1- Standardization and stability of the exchange rate
2- Transferring resources from the parallel market to the formal market
3- Attracting remittances from Sudanese working abroad through official channels
4- Attracting foreign investment inflows
5- The normalization of relations with regional and international financing institutions and friendly countries, to ensure the attraction of grant and loan flows from these bodies
6- Motivating producers, exporters and the private sector by giving them the split exchange rate
7- Limiting smuggling of goods and currencies
8- Filling the gaps to prevent speculators from benefiting from a gap between the official price and the price in the parallel market
9- Helping to work on exempting Sudan’s external debts by taking advantage of the Heavily Indebted Poor Countries initiative
The Central Bank of Sudan indicated that ensuring the success of the results of these policies and procedures requires the solidarity and concerted efforts of all relevant authorities, including government agencies and the private sector, and the implementation of the economic reform package immediately without delay and with full coordination LINK