Khartoum — The Sudanese Pound (SDG) continued its rapid decline against foreign currencies, as the US Dollar price rose by two Pounds within two days on the parallel forex market. Businessmen are buying more foreign currencies or gold to retain their capital.
Currency traders told Radio Dabanga on Friday that the US Dollar hit SDG 42 in Khartoum. The greenback traded for SDG 40 on Wednesday.
The official indicative rate of the US Dollar, set by the Central Bank of Sudan (CBoS) at SDG 18 a week ago, has not changed.
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.
"The value of the Pound plummeted sharply last week because more traders and businessmen began buying foreign currencies or gold to retain their capital," he explained.
In the past few years, prices of plots and houses has increased significantly as well because of the increased demand by people who wanted to secure their capital.
In November last year, while the US Dollar traded at around SDG 20 on the black market, the Sudanese Finance Ministry imposed new measures to halt the plummeting Pound on the black market. A number of currency dealers were arrested and others fled abroad.
In early January, the customs rate of the US Dollar was raised from SDG 6.7 to an indicative SDG 18, a rise of 260 per cent. However, the increased shortages in the foreign exchange market caused by the new tight measures against the currency traders pushed the black market rates to even higher levels.
After neglect and fraud destroyed more than 70 per cent of the country's domestic production facilities in the past few decades, the country has to rely on imports to meet the needs of basic commodities. The falling value of the Sudanese currency, required to finance the imports, therefore resulted in huge price hikes for fuel, food, and medicines - which prompted mass protests across the country in January.
"The exchange rates can only be stabilised if sufficient amounts of Dollars are systematically injected into the banks." - Economist
On Thursday, President Omar Al Bashir had a meeting with the Governor of the CBoS and the Minister of State of Financial Affairs concerning the ongoing price hikes.
In a press statement after the meeting, CBoS Governor Hazem Abdelgadir said they discussed new measures to stabilise the exchange rates and liquidity of the hard currencies needed for the import of wheat, medicines, and other basic consumer goods.
According to Dr Hasan Bashir, Professor of Economics at El Nilein University, the exchange rate of the Dollar against the Pound can only be stabilised if sufficient amounts of Dollars are systematically injected into the banks in the country.
"If not, the Dollar rate will soon pass the 50 Pound on the parallel market," he told this station two weeks ago.
The Sudan Democracy First Group (SDFG) holds the Sudanese government responsible for the rapidly growing economic crisis.
In January, the Kampala-based Sudanese think-tank severely criticised the 2018 National Budget, "designed to allocate the majority of funds to security, defence and presidential expenditures", the devaluation of the Sudanese Pound by 260 percent, and the liberalisation of wheat prices which caused the price of the staple food to triple within the first few days of the year.
Dr Hamid Eltigani, head of the Department of Public Policy and Administration at the American University in Cairo, told this station in November last year that Khartoum is responsible for the depletion of the country's resources and the disruption of the industries and agricultural and livestock production that are generating foreign currencies to Sudan.
"The economic crisis can only be tackled after political reforms," he stated.
* Based on the official US Dollar rate quoted by the Central Bank of Sudan (CBoS)