Sudan devalues again
The government of Sudan devalued the Sudanese pound by around 25% against the US Dollar in November as the country continued to struggle with an economic crisis exacerbated by the secession of South Sudan in mid-2011. This is the second large devaluation of the past twelve months and one that had been pre-empted by a widening of the gap between the official and black market exchange rates. Exchange rate reforms are being encouraged by the IMF and could be introduced in 2014, resulting in the unification of the country’s various exchanges rates. Government officials have acknowledged the possibility of introducing a single exchange rate to unify the currently operated fuel, wheat, and customs rates, while allowing commercial bank rates to fluctuate within a narrow band of say 4% around this unified rate. In any event, the persistence of a large current account deficit, shortage of foreign exchange reserves and elevated consumer price inflation suggest further currency devaluation in the years ahead.