Sudan is set to devalue its currency in January from the current exchange rate of 6.7 Sudanese Pounds per dollar to 18, the finance minister said on Tuesday.
Earlier this month, the International Monetary Fund urged the country to float its currency in order to boost growth and investment, but the government has ruled out a market-determined exchange rate.
The devaluation which includes the customs exchange rate – the rate used to calculate customs duties – is timed to take place when the 2018 budget begins, in the first week of January, Finance Minister Mohamed Othman Rukabi told Reuters.
Traders said the black market rate jumped to 27 SDG per dollar from 25 SDG per dollar on Tuesday after the devaluation was announced.
“The whole budget for the new year is based on a an official rate of 18 SDG per dollar. We expect the results of this policy to be positive for the Sudanese economy,” he said.
The Sudanese pound has weakened sharply against the dollar since Washington lifted 20-year-old economic sanctions in October, encouraging traders to step up imports and putting pressure on scarce hard currency.
Businesses are unable to secure their hard currency needs at the official peg of 6.7 pounds to the dollar and are forced to resort to a parallel market.
To stem the flow of scarce currency out of the banking system, Sudan announced emergency measures last month after the pound fell to a record low of 27 against the dollar on the black market.
The country also imposed tight restrictions on imports of luxury goods, directing remaining liquidity toward “sectors that boost growth”, the central bank said.
The import-dependent country has suffered both from the sanctions and from the secession of the south in 2011, when it lost three-quarters of its oil output, its main source of foreign currency.
The IMF last year agreed to loan Sudan’s neighbor Egypt $12 billion if it implemented tough fiscal reforms.