November 13, 2017 (KHARTOUM) – Sudan’s Finance Minister Mohamed Osman al-Rikabi Monday has denied intentions to float the exchange rate of the Sudanese pound.
- A Sudanese man shows freshly-minted notes of the new Sudanese pound in Khartoum on July 24, 2011 (Getty)
A floating exchange rate is a regime where the currency price is set by the forex market based on supply and demand compared with other currencies.
This is in contrast to a fixed exchange rate, in which the government entirely or predominantly determines the rate.
In November 2016, the Central Bank of Sudan (CBoS) introduced an incentive policy, increasing the exchange rate in commercial banks by 131%. As a result, the U.S. dollar exchange rate went up in banks to 15.8 SDG from the official rate of 6.5 SDG.
However, this measure didn’t halt the rise of the dollar against the pound which has reached 24.7 SDG in the black market.
Several economists, including former Finance Minister Abdel-Rahim Hamdi, have recently called on the government to give up the system of managed floating exchange rate and allow the market mechanisms to set the price of the pound.
They say the move would allow drawing foreign capital back to the country, improving Sudan’s external competitiveness, supporting exports and attracting foreign investment.
In press statements at the National Assembly Monday, al-Rikabi said the government has no intention to float the price of the Sudanese pound, describing any reports in this regard as mere “rumours”.
He pointed out that his ministry would take a number of measures to strengthen the price of the pound, stressing the value of the pound would stabilize in the few coming days.
The Sudanese pound has lost more than 100% of its value since South Sudan’s secession in 2011, pushing inflation rates to record levels given that the East African nation imports most of its food.
The most recent International Monetary Fund (IMF) report indicated that Sudan’s foreign reserves cover approximately one and a half months of imports.