(3 minutes read)
· Sudan devalues its currency pound, which is aimed to estabilize the economy, currently going through a series of crisis
· As a result of the devaluation, the exchange rate of the Sudanese pound will rise from 55 pounds for one dollar to 375. That is near about the black market rate
· The United States and Great Britain will now release more than 1.5 billion dollars in assistance, including a 450 million dollar program for the poorest families
Sudan devalues its currency pound, which is aimed to stabilize the economy, currently going through a series of crises. Most of the woes for the common man are in the form of shortages and rising prices. What is the inside story of devaluation, other than the one put out by the Central Bank to shore up the exports and to make imports costlier, a standard remedy prescribed by monetarist when upfront with creeping inflation and shortages.
The Sudanese Central Bank is aligning itself with the black market rate. As a result of the devaluation, the exchange rate of the Sudanese pound will rise from 55 pounds for one dollar to 375. That is near about the black market rate. The devaluation, which was recommended by the IMF and donor countries, is designed to strike at the very root of black marketing in the currency market, where the value of local currency vis a vis dollar went very low but the official rates were fixed at the same level, creating avenues for black market of dollar. The IMF also has recommended enhanced exchange rate controls to stem out black marketing.
By aligning the two exchange rates- official and black market-, the Central Bank is paving the way for financial support programs. The United States and Great Britain will now release more than 1.5 billion dollars in assistance, including a 450 million dollar program for the poorest families.
The International Monetary Fund set last September as a deadline for the government to move to a unified market-clearing exchange rate. Now, Sudan should conclude a 12-month Staff Monitoring Program with the IMF to get relief on its foreign debt assessed at $70 billion. Sudan has been facing several economic woes, including a huge budget deficit and widespread shortages of essential goods and soaring prices of bread and other staples. The annual inflation soared past 300 percent last month.
