Sudan switches to managed currency float amid economic crisis
Sudan is moving from a fixed exchange rate to a managed float, the central bank said Sunday, but at the risk of fanning discontent, in line with an IMF program.
“The transition government has decided to undertake a package of policies aimed at reforming and unifying the exchange rate system by applying a managed flexible exchange rate system,” Sudan’s central bank said in a statement.
Sudan has grappled with a booming black market that has seen the local pound exchange reach 400 pounds per dollar, while the official rate has been set at 55 pounds per dollar.
A key aspect of an IMF program negotiated last year is closing the yawning gap between those exchange rates. However, the move is expected to dramatically depreciate the official exchange rate towards the pace of the black market, driving some prices higher as people struggle with an inflation rate that in January exceeded 300%.
The new framework, the central bank said, would make it possible to decide the exchange rate according to supply and demand, but with the monetary authority still intervening in the market.
According to Nation Africa, the policy shift in the exchange rate is one of a series of painful reforms eventually aimed at eliminating economic dislocations, securing debt relief and attracting investment as the country is going through a rocky transitional phase following the ouster of President Omar al-Bashir in April 2019.
On Sunday, the central bank declared that it was enforcing restrictions on hard currency movements, including preventing more than $1,000 from being carried by people leaving Sudan.