Despite Fighting in Khartoum
Exchange rate of the Sudanese pound has been stable against foreign currencies despite the fighting that entered its third month in Khartoum and has recently expanded to encompass a few states in western and central of Sudan posing an unpredictable surprise according to some observers.
According to perspectives of some observers, the exchange rate ranged around 600 pounds per US dollar in a relative stability by virtue of the pledge made by donors in the high-level pledging conference on Sudan that was held during last June to provide USD1.5 billion in humanitarian aid, notwithstanding the significant contraction besetting the Sudanese markets, along with price spikes with factories coming to standstill in Khartoum state where some of them were partially destroyed due to the volatile situation.
The Sudanese pound has continued to decline reaching a record level during the 24 months that preceded the aforementioned date to fall against the dollar by nearly 700 percent from 55 to 375 pounds owing to the decision taken by the Sudanese government on Feb. 21, 2021, to liberate the pound’s exchange rate known as floating.
The decision was intended to eliminate the current distortion of the Sudanese economy through filling a substantial vacuum between the official price of 55 pounds per dollar and the equivalent price of about 370 pounds before the decision.
While opinions of economic analysts varied in this regard, Qatar News Agency (QNA) surveyed their opinions with respect to the relative stability in the Sudanese pound.
Speaking to QNA, Associate Professor in Finance and Banking at the Jordanian Al Al-Bayt University Dr.Omar Khlaif Gharaibeh alluded the reason behind the relative stability in the Sudanese pound to a myriad of factors the chief of which is the fact that fighting is currently confined to Khartoum state with a few exceptions as one among 18 states of Sudan, pointing out that such a stability has largely contributed to the monetary and financial stability within the country.
Gharaibeh added that another factor is anchored in the fact that Sudan depends on local investment to offset foreign investment as the latter has declined to under USD500 million in 2021 from nearly USD2 billion in 2012, as per World Bank data, pointing out that escape of the capital from Sudan has been very little with conflict being focused on Khartoum and both factors have reduced the implications of this fighting on the financial stability in Sudan.
He outlined that people should not be oblivious to the role undertaken by the Central Bank of Sudan to promote confidence in the Sudanese banking sector by reassuring depositors and bank account holders that their money is safe after most of banks in various Sudanese states have been regularly operating which increased confidence in the monetary policy and banking sector within the country in the short term, adding that the bank undertook vital measures to promote its monetary policies that targeted monetary stability to unify foreign exchange rate.
For his part, Sudanese economist Tariq Ibrahim Abu Shouk emphasized to QNA that the recent stability of local currency exchange rate against world currencies, especially the dollar does not imply that the Sudanese economy has recovered, adding that the corroborating evidence is the inflation that evidently has continued rising to exponential levels.
He pointed out that the recent stability in the Sudanese pound was due to several factors, including the import movement that came to a complete standstill as factories that were importing production inputs had stopped operating, noting that the Sudanese pound faced a substantial deterioration since the cession of South Sudan.
Source: Qatar News Agency
