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Central Bank of Sudan announces re-involvement with foreign exchange price setting

The Central Bank of Sudan announced that it would be involving itself, once again, with the foreign exchange process once more, following the unprecedented degradation of the local Sudanese pound.

Khartoum: Elfadil Ibrahim

The central bank in Sudan revealed on Thursday a number of brochures that included changes to the currency exchange, import/export, and gold export policies.

In addition, the brochures revealed that a plan has been drawn up to help stabilize the foreign exchange and curb inflation.

The dollar to pound exchange rate took an unexpected tumble as it dropped from 615 pounds to the dollar to 810 pounds, in the parallel market, in less than a week.

 Fixing Problems

The Central Bank of Sudan’s Thursday brochure said that the latest decisions were the banks attempts at fixing structural problems to the economic problem, whose severity has become incredibly apparent with the growing inflation rates and the instability in the foreign exchange rate.

The bank added that to the flexibility that it had been using in managing foreign exchange policy since February 2021, in addition to other sources, have enabled it to build estimated and diversified foreign reserves.

“The Central Bank of Sudan will, as of today, intervene in the foreign exchange market to ensure the removal of imbalances and unwanted changes and the restoration of stability,” the Central Bank stated.

Economic analyst Babiker Ahmed Abdullah believes that the Central Bank of Sudan’s latest publication works as a “reversal of the pound-floating policy announced by the Bank of Sudan recently.”

He told AlTaghyeer that “the Bank of Sudan’s decision signals a return to the policies of the previous government during the era of Prime Minister Abdallah Hamdok, by returning to the flexible exchange rate managed by the Central Bank of Sudan, which will set the price for banks again, which means the failure of the flotation policy.”

Babiker predicted the return of the Bank of Sudan to the previous its previous auction system.

“The government does not have enough solutions, so it will resort to this measure once more – perhaps it may help curb the rising dollar,” he said.

Backfire

Abdallah warned of an adverse effect on the price of the dollar in the parallel market if the lack of credibility of the existence of “free currencies” (US dollars) at the Bank of Sudan was proven.

“This matter will negatively affect the market,” he added.

“The danger also lies in the double quantities in the central bank, and once they run out, the market will explode this time.”

Early in February, the Central Bank of Sudan announced the unification of the Sudanese pound exchange rate, amid fears that the new policy would lead to more fluctuations in exchange rates and inflation levels.

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