Sudan central bank says market intervention brought rapid decline in rate of US dollar

October 4, 2010 (KHARTOUM) – The governor of Sudan’s central bank Sabir Mohamed Al-Hassan today hailed the impact of injecting more foreign currency into the market that began last Sunday saying it had brought about a quick drop in exchange rate of the Sudanese pound to the dollar.

In press statements carried by Sudan state media (SUNA) Al-Hassan reiterated his position stated last week that uninformed rumors about the impact of the South Sudan referendum on the economic viability of the country led to the Forex crisis.

Last week the central bank governor announced that the process of supplying banks and Forex bureaus with hard currency will begin Sunday in a new bid to reverse the deterioration of the Sudanese pound.

The referendum due next January was a key provision of the 2005 Comprehensive Peace Agreement (CPA) between north and south Sudan that ended two decades of civil war, during which about two million people were killed.

Southerners across the country and abroad will choose whether to split Africa’s largest country or remain in a united Sudan. Most observers expect an overwhelming majority of Southerners voting in favor of secession.

A central bank official told the pro-government Al-Rayaam newspaper yesterday that banks received 40%-45% of the foreign currency injection and Forex bureaus received 40%. The official further said that more money will be provided to airlines and stressed that the central bank is serious about meeting the demands of the market particularly in light of improved foreign reserves position.

The official exchange rate last Thursday was 2.4279 Sudanese pounds to the dollar. On the black market the rate was around 3.10 Sudanese pounds. The central bank governor had expressed hope that the intervention would bring the black market exchange rate to between 2.60 and 2.70 Sudanese pounds to the dollar.

Sudan Tribune has not been able to confirm today’s price on the black market.

Analysts had expressed doubt last week over the capability of the central bank to make any meaningful intervention at this point especially because of the low levels of foreign currency at the central bank.

In a report released last month, the International Monetary Fund (IMF) stressed the urgency of rebuilding Sudan’s sharply declining reserves of foreign currency and undertakes further measures to keep borrowing under control.

The IMF report showed a sharp decline in reserves held by the Sudan central bank from $1.58 billion in 2006 to $390 million in 2009 which is estimated to cover a little over two weeks of imports.

(ST)