Asharq Al-awsat English Middle-east and International News and Opinion from Asharq Al-awsat Newspaper

Sudan’s US Dollar Auctions Ease Exchange Rate Pressure

Sudan’s US Dollar Auctions Ease Exchange Rate Pressure

Tuesday, 8 June, 2021 - 10:00
A woman displays Sudan's currency at the central bank in Khartoum, Sudan. (AP)

Sudan’s central bank said on Sunday it had allocated the full $50 million it offered in its third foreign currency auction.

Traders said the new policy seemed to be narrowing a gap between official and black market rates that had widened in recent weeks.

Sudan sharply devalued its currency in February, and the auctions are designed to support the flexible, managed float by supplying importers with dollars through the country’s commercial banks for the first time in years.

A transitional government is attempting to pull the country out of a deep economic crisis and is pursuing aggressive International Monetary Fund (IMF)-monitored reforms in hopes of securing debt relief and new financing.

A dollar fetched 450 pounds on the country’s black market on Sunday, and fell to 445 pounds after the auction results were announced, traders said.

The rate has fallen from 470 pounds at the time of the second auction last week, while the official rate on Sunday was about 426 pounds.

Traders told Reuters that the black market was shaken up by the second and third auctions, having been previously unsure whether the government would be able to inject dollars into the market.

The widening in the types of goods covered by the auction also decreased the space where the black market held the advantage, they explained.

“It is not a deep market,” said a senior finance ministry official.

“If there’s $30 or $40 million in transactions that aren’t on the approved list, and therefore going to the parallel market, this could contribute to a gap,” the official said, adding that the auctions also provide transparent information on transactions in a market where rumors are influential.

Security forces had also cracked down, traders affirmed. On Thursday, state news agency SUNA reported that nine “national economy saboteurs” had been arrested.

Sunday’s auction accepted 174 bids at between 395 and 422 pounds to the dollar.

A fourth weekly auction was scheduled for next Sunday, the central bank said.

Editor Picks