Sudan Devalues Currency to Meet Key Condition for Debt Relief

By Reuters

Feb 22, 2021 07:18 PM

Sudan's central bank sharply devalued the currency on Sunday, announcing a new regime to "unify" official and black-market exchange rates in an effort to overcome a crippling economic crisis and access debt relief.

A picture taken in the South Darfur village of Hamada, north of the region's capital town Nyala on February 3, 2021, shows children at a school as residents return to the village. Photo: VCG

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. The central bank set the indicative rate at 375  Sudanese pounds to the dollar, several commercial banking sources said, from a previous official rate of 55  Sudanese 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 5 percent above or below that rate.

The circular also set a profit margin between buy and sell prices of no more than 0.5 percent. Authorities would not control the rate, the central bank governor told reporters, though Finance Minister Jibril Ibrahim said unspecified foreign funds were on their way to Sudan and the central bank could intervene if needed.

"The decision is not a float, but a policy of flexible management," said central bank Governor Mohamed al-Fatih Zainelabidine. Steps had been taken to streamline imports of strategic commodities and limit imports of nonessential goods ahead of the devaluation, officials said. Ibrahim said Sudan's customs exchange rate was not included in the devaluation.