Sudan’s central bank raises premium on forex sales for the second time

December 1, 2010 (KHARTOUM) –The Sudan central bank on Wednesday further bumped up the margin at which foreign exchange bureaus and banks are allowed to buy hard currency.

The premium is now 18.29% which is up from the 17.60% set by the central bank last Sunday.

Last week, the authorities introduced the premium concept to encourage holders of forex to come forward and sell their holdings at a generous rate close to that of the black market. The margin was initially set at 16.29% above the official price.

Sudan runs a so-called managed float system, in which the central bank calculates an indicative rate based on previous day transactions and intervenes on the market if quotes break away from a plus/minus 3 percent corridor around that rate.

Today’s 18.29% margin above the bank’s upper limit of 2.55 equals 3.02 pounds, almost equal to the black market rate. The black market rate in the last few weeks ranged between 3.00-3.20 pounds.

Sudan’s pound has been hit by speculation of an economic shock or possible renewed conflict as the oil-producing south of the country hurtles towards an expected vote for independence from the north in a January 9 referendum.

This prompted the central bank to impose a series of restrictions including a cap on how much people can buy in Forex and requiring documentation to prove a need for it such as traveling abroad for medication, tourism and attending school.

Analysts and traders said a central bank policy implemented last week on setting margins over their official rates was an effective temporary devaluation of the pound, which the bank hoped to row back once uncertainty around the referendum subsided.

(ST)