KHARTOUM) - Sudan’s central bank on Sunday floated the local currency saying its price will be fixed by the exchange rate in the local forex market.
The dollar was selling for about 380 Sudanese pounds in cash transactions, as the official rate was at 55 to the dollar.
"Banks are required to announce currency exchange rates based on supply and demand in the market," said the Bank of Sudan in a circular issued on Sunday.
The central bank further said in a separate statement that the purpose of the devaluation is to stabilize the exchange rate and to transfer the hard currency from the parallel market to the formal market.
The devaluation would allow the banks to attract foreign investors and remittances of Sudanese abroad. Also, the measure will pave the way to normalize relations with regional and international financial institutions as well as making it easy to ensure grant flows and loans from these bodies.
Sudanese government came under huge international pressure to liberalize the pound as it was reluctant to take this decision fearing left forces that reject any reform backed by the international financial institutions.
The unification of the exchange rates was a structural benchmark set by the IMF Sudan must complete before getting relief on $60 billion in foreign debt under the Heavily Indebted Poor Countries (HIPC).
Also, the donors delayed the release of money for a safety net programme aiming to support families hit by the harsh economic reforms.
"Some $400 million in aid and World Bank pre-arrears clearance grants for the first phase of the programme has been withheld because the money would be worth much less if converted at the official exchange rate," said Reuters recently.
The U.S. Embassy in Khartoum welcomed the decision of the transitional government to liberalize the Sudanese pound.
"This decision paves the way for debt relief and significantly increases the impact of international assistance, much of which previously had to be spent at an official exchange rate, delivering only a fraction of its potential value to the Sudanese people."
"The government’s decision also will greatly help Sudanese companies and increase international investment, as both local and foreign companies will no longer encounter difficulties doing business in Sudan because of the dual exchange rate"
Source: Sudan Tribune