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Currency traders confused as Sudanese pound floats

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Customers making cash transactions at teller's windows at Bank of Khartoum (file/ GettyImages)
February 22, 2021 (KHARTOUM) - The parallel currency market in Sudan has been confused and reluctant to buy foreign currencies on Monday, the first day after the government’s decision to abandon its fixed exchange rate and to unify it with black-market exchange rates.

Morning trading in the parallel markets opened at 395 pounds per dollar for the selling price, while the purchase price remained at 390 pounds per dollar. However, at the closing of the market, the buying rate of the US dollar was SDP 380, while its selling rate was SDP 385.

One of the dealers who preferred anonymity told the Sudan Tribune that there is a big increase in the volume of foreign currency supply compared to the last period.

He added that many of the foreign exchange sales took place in banks after the unification of the exchange rate, a move that contributed to the decline in the sale of currencies in parallel markets during the first day.

Meanwhile, banking sources confirmed that banks have started receiving estimated sums of foreign currencies.

It is expected that commercial banks will receive more foreign currencies in the coming days, especially if the Central Bank of Sudan starts pumping foreign currency.

A banking source told the Sudan Tribune that the amount of sums currently received by banks does not exceed household expenses. But it will increase in the future, especially if the Central Bank has pumped large sums of foreign exchange, which will contribute to an increase in supply.

"Banks can now deliver sums in foreign currency to dealers in the event of transfers from abroad," he stressed.

The lifting of economic sanctions on Sudan in 2017 led to the decline of the Sudanese pound against the dollar because the end of the embargo encouraged traders to increase imports, putting pressure on scarce hard currency.

With the independence of South Sudan in 2011, Sudan lost three-quarters of its oil output, its main source of foreign currency.

Since the regime change in Khartoum, the International Monetary Fund (IMF) called on the Sudanese government to liberalize the pound but the government feared the inflationary effect of the measure.

The former Finance Minister Ibrahim al-Badawi called for the floating of the local currency but the prime minister did not dare to take the decision fearing the pressure of the ruling coalition particularly the left forces.

In a statement released on Monday, Badawi welcomed the decision and stressed that a successful liberalization requires that the government stop borrowing from the Bank of Sudan in an indiscriminate and programmatic manner to finance its expenditures.

Also, "The state must turn into a seller of foreign exchange to finance imports of strategic goods by the private sector," he further said.

(ST)

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Kind regards,

The Sudan Tribune editorial team.


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