Sudan’s central bank said on Sunday it had allocated all of the $50 million it offered in its third foreign exchange auction, and traders said the new policy appeared to narrow the gap between official and black market rates, which has widened in recent weeks.
Sudan sharply devalued its currency in February, and the aim of the auctions is to implement a flexible managed exchange rate policy by supplying dollars to importers via the country’s commercial banks for the first time in years.A transitional government is trying to pull the country out of a deep economic crisis and push through tough reforms monitored by the International Monetary Fund in the hope of getting debt relief and new financing.
Dealers said that the dollar recorded 450 Sudanese pounds on the black market in Sudan on Sunday, and dropped to 445 after the auction results were announced. The price decreased from 470 pounds at the time of the second auction last week, while the official price on Sunday reached 426 pounds.
Dealers told Reuters that the black market was shaken by the second and third auctions, after there was no certainty in the past whether the government would be able to pump dollars into the market.
Dealers said that the increase in the types of goods covered by the auction also reduced the size of the advantage enjoyed by the black market.
“It’s not a deep market,” said a senior finance ministry official.
“If there are transactions worth 30 or 40 million dollars that are not on the approved list, and therefore the trend to the parallel market, this may contribute to a gap,” the official added, adding that the auctions also provide transparent information about transactions in the market, where rumors are influential.
Traders said security forces also launched a crackdown. On Thursday, the official Sudan News Agency reported that nine “saboteurs of the national economy” had been arrested.
And before Sunday’s auction, 174 applications were submitted at exchange rates ranging between 395 and 422 pounds to the dollar.
The central bank said that a fourth weekly auction is scheduled for next Sunday.