The US embassy in Khartoum has welcomed the Sudanese government’s “courageous decision” to devalue its currency in its bid to overcome a crippling economic crisis and access debt relief.
Sudan’s central bank sharply devalued the currency on Sunday, announcing a new regime to “unify” official and black-market exchange rates.
The change is a key reform demanded by foreign donors and the International Monetary Fund, but was delayed for months as shortages of basic goods and rapid inflation complicated a fragile political transition, Reuters said.
“ This decision paves the way for debt relief and significantly increases the impact of international assistance much of which had to be spent before at an official exchange rate, delivering a fraction of its potential value to the Sudanese people,” US mission said in a series of tweets on Sunday.
We welcome the Sudanese government’s courageous decision to move forward today with exchange rate reform. This decision paves the way for debt relief and significantly increases the impact of international assistance…(1/3)
— US Embassy Khartoum (@USEmbassyKRT) February 21, 2021
“This decision will also help Sudanese companies and attract international investment as both local and foreign companies will no longer encounter difficulties doing business in Sudan because of the dual exchange rate,” it added.
The central bank set the indicative rate at 375 pounds to the dollar, several commercial banking sources said, from a previous official rate of 55 pounds. Recently, the dollar traded at between 350 and 400 Sudanese pounds on the black market.
The central bank will set a daily indicative rate in a “flexible managed float”, a circular sent to banks said. Banks and exchange bureaus are required to trade within per cent above or below that rate.
In February 2018, Sudan’s central bank announced it would devalue the local currency to 30 Sudanese pounds against the US dollar, the second such move in weeks amid soaring inflation at the time.
Steps had been taken to streamline imports of strategic commodities and limit imports of non-essential goods ahead of the devaluation.
Reuters said Sunday’s move had been expected late last year under an IMF staff monitoring programme that could lead to relief on Sudan’s estimated $60 billion in foreign debt, but was held up by political uncertainty.