Khartoum — The Ministry of Finance of Sudan has announced the continuation of a policy of reducing the circulation of money among the public for the next seven days in measures aimed to halt the Sudanese currency's downward slide against the US Dollar.
State Minister Finance Abdelrahman Dirar said: "The policy of reducing money circulation has achieved its goal of raising the value of the Sudanese Pound against the US Dollar".
He announced in a press statement in the Parliament that the Central Bank of Sudan (CBoS) will take new measures in the coming days including allowing commercial banks to engage in import and export operations.
On Monday, President Omar Al Bashir stressed the need to continue the measures to absorb liquidity so as to reduce the cash mass outside the banking system to be employed in productive projects.
In an attempt to halt the plummeting Pound on the black market, the Sudanese government raised the customs rate of the US Dollar from SDG 6.7 to an indicative SDG 18 in early January.
The prices of basic commodities immediately doubled and in some cases tripled. The measure also led to the halting of incoming and outgoing traffic at the Port Sudan harbour, as suppliers refused to have their goods cleared. The Dollar rate however, continued to rise. The greenback sold for SDG 42 on the parallel forex market on 4 February - against SDG 28 in early January.
The price of gold at the markets in the Sudanese capital witnessed a major leap as well. "A gram of gold sold for SDG 1,000 (*$55) last week now costs SDG 2,000," a trader reported on Febraury 4.
On February 5, the indicative exchange rate of the US Dollar was raised again, from SDG 18 to SDG 30. The prices of wheat and sorghum jumped again.
On February 8, the Central Bank of Sudan banned any import operations by banks using their own foreign currency without obtaining its prior approval. Professor Hamid Eltigani, Head of the Department of Public Policy and Administration at the American University of Cairo, described the decision as "a police security measure that has nothing to do with economic measures that will have disastrous consequences in a matter of days".
* Based on the official US Dollar rate quoted by the Central Bank of Sudan (CBoS)