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Sudan takes long awaited step of floating its currency

22
Feb

Sudan takes long awaited step of floating its currency

Monday, February 22, 2021

On Sunday 21st of February 2021, Sudan took the long awaited step of floating its currency.

Previously, the US dollar was trading at over 350 SDG to the Dollar on the black market, while the official rate was at 55 SDG to the Dollar. This situation created massive obstacles for all businesses whether multi-national companies, local business or international NGO’s.  According to a statement by the Central Bank, the Sudanese currency will now fluctuate according to supply and demand. It said that the flotation is part of measures which the transitional Government as embarked on to help stabilize the country’s economy. In a statement the Central Bank said that the flotation would help “normalisation of ties with international and regional financial institutions and friendly countries to ensure the flow of grants and loans” into Sudan's economy.

The Central Bank also said that it will announce a daily flexible indicative rate in a “flexible managed float” that banks and other exchange bureaus are required to trade at within 5% above or below.

The managed floating system, that took effect on Sunday, gives the Central Bank the option to set a rate based on the trading average, Al-Fatih Zayed al-Abidin, the Central Bank Governor said in a news conference in Khartoum along with Finance Minister Gibril Ibrahim. Mr Ibrahim said "It is in our interest, in the interest of the country, and in the interest of the citizen.”

Western Governments welcomed the decision to liberate the exchange rate. The US Embassy in Khartoum welcomed the “courageous” move, saying it paves the way for debt relief and significantly increases the impact of international assistance.

“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 said.

Volker Perthes, the UN envoy for Sudan, also hailed the floatation, saying, “It demonstrates that the transitional authorities can reach consensus, take difficult decisions and carry them through.”

Sudan has for years struggled with an array of economic woes, including a huge budget deficit and widespread shortages of essential goods and soaring prices of bread and other staples and pharmaceutical products. The country is $60 billion USD in debt and its annual inflation has soared past300% in the last month.

As a result, we at SCLO welcome the floatation of the currency. We hope to see new investment into Sudan. In addition, we are ready and able to assist in the legal needs of businesses of all types and sizes.

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February 22, 2021

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