20 May 2012

Sudan: Central Bank's Decision On Currency Exchange Rates Draws Ire of Finance Minister

Khartoum — The Central Bank of Sudan's (CBS) decision to allow Forex bureaus in the country to use their own rates instead of the official one in currency transactions has attracted criticism from senior officials including the finance minister who predicted that the move will not succeed in stopping the depreciation of the local currency.

Sudan has been struggling to contain the deteriorating value of its own currency since the country lost its main source of hard currency revenues when South Sudan seceded in July last year taking with it nearly three quarters of the country's oil production.

The US dollar trades for twice the official rate of 2.7 Sudanese pounds in the black market despite multiple interventions by the central bank to inject hard currency into the market.

Last week the CBS informed head of Forex offices that as of Monday, 21 May, they will be able to buy and sell currencies using their own exchange rate away from the official one. Pro-government media reported that the decision is set to include commercial banks.

But sources speaking on the condition of anonymity revealed to Sudan Tribune on Sunday that the move had sparked disagreements within government economy circles with some officials rejecting the move and warning that it was taken without the approval of finance minister Ali Mahmoud Abdel-Rasool.

According to the sources, Ali Mahmoud reacted furiously to the CBS's decision and predicted that it will result in total failure.

Meanwhile, rumors spread in the capital Khartoum that the CBS has reversed its decision to allow Forex offices to use their own rates.

A number of Forex bureaus officials interviewed by Sudan Tribune stated that they are yet to receive an official CBS notification of the new regulations.

The interviewees said they would continue to use the official rate until they receive a formal notification of its cancellation.

In a related development, CBS officials held a meeting on Sunday with heads of Forex bureaus and promised to inject the amounts of foreign currency needed to allow increases of exchange rates.

CBS officials also promised to raise the ceiling of foreign currency that individuals are allowed to carry abroad, stating that travelers seeking medical treatment will be allowed to carry US$3,000 with the possibility that the number could go up to US$10,000.

Banks and Forex bureaus are only allowed to sell a limited amount of hard currency to individuals and only if they can provide a valid justification including travel for medical treatment or studying abroad.

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