Sudan central bank expecting external help to build forex reserves: report

October 19, 2010 (KHARTOUM) – The Sudan central bank will be receiving around $1 billion from external sources to shore up its foreign exchange reserves, according to a newspaper report.

The Doha-based Al-Sharq newspaper quoted an unnamed central bank official as saying that the deposit will be forthcoming but did not give a timeframe nor did he say who was providing it.

Sudanese officials including the finance minister and the governor of the central bank paid a visit to the United Arab Emirates (UAE) last week and met with their counterparts over there while delivering a letter from president Omer Hassan Al-Bashir. However, the nature of the discussions were not disclosed.

The official denied to the newspaper that foreign reserves have fallen below the $1 billion mark stressing that the central bank has enough to cover two months of imports.

This month the central bank injected foreign currency into the market to halt the appreciation of the U.S. dollar versus the Sudanese pound. But the intervention appeared to have done little as the exchange rate continued to deteriorate unfavorably.

The pro-government Al-Rayaam newspaper said last Friday that the official exchange rate on Thursday was 2.37 Sudanese pounds to the dollar. On the black market the rate was around 3.20 Sudanese pounds.

The official speaking to Al-Sharq blamed speculators and vowed more crackdown on black market and intervention to increase forex supply.

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

The IMF report showed a sharp decline n 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.

In September, Sudan said it would cut imports by up to 20 percent to bolster dwindling foreign exchange reserves, a shortage compounded by U.S. trade sanctions.

(ST)