Sudanese pound drops to new low as economic crisis deepens


March 23, 2022 (KHARTOUM) – The Sudanese pound has continued to fall against major currencies to unprecedented lows amid growing questions over the government’s plans to rein in the economy.

A parallel foreign exchange market trader told {Sudan Tribune} on Wednesday that the US dollar is now selling at 750 pounds against 635 at major Sudanese banks.

He attributed the decline in the value of the local currency to an increase in demand for hard currency in the face of limited supply in addition to traders keeping foreign currencies in their possession.

The Sudanese public has long resorted to converting their savings into dollars and gold in an attempt to maintain their value given the continued deterioration of the pound.

Earlier this month, Sudan’s central bank announced a further devaluation of the pound, subjecting it to market supply and demand.

The ousted transitional government led by Abdallah Hamdok managed to maintain unusual exchange rate stability that lasted about nine months, supported by larger foreign exchange reserves.

But following the October 2021 military coup, foreign donors suspended aid, which depleted those reserves and forced the military-led government to raise taxes and the cost of government services.

Bloomberg reported last month that the central bank suspended the accounts of hundreds of exporters who failed to deposit their dollar earnings locally.

The impact of the erosion in the value of the Sudanese pound will not only be felt by ordinary citizens, but goes beyond to affect businesses who have no choice but to raise prices to stay flow.

There are also fears of further inflationary pressures caused by Russia’s invasion of Ukraine, which has led to higher commodity prices, from oil to wheat imported by Sudan.

A UN World Food Program (WFP) official told Reuters nearly half of Sudan’s population faced acute hunger, double the estimate last year, food prices and other essential goods continuing to increase.

(ST)

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