“The transition government has decided to undertake a package of policies aimed at reforming and unifying the exchange rate system by applying a managed flexible exchange rate system,” Sudan’s central bank said in a statement.
Sudan has been grappling with a flourishing black market that has seen the local pound trade at over 400 to the dollar, while the official rate was fixed at 55 pounds to the greenback.
Closing the yawning gap between those exchange rates is a key element of an IMF programme agreed last year. But the move is expected to substantially devalue the official exchange rate towards black market levels, sending some prices higher as citizens grapple with an inflation rate that topped 300 percent in January.
The new system, the central bank said, would allow for the exchange rate to be determined by supply and demand, but with the monetary authority still intervening in the market.
The exchange rate policy shift is one of a batch of painful reforms ultimately aimed at removing economic dislocations, securing debt relief and attracting investment as the country navigates a rocky transitional period following the April 2019 ouster of president Omar al-Bashir.
The US recently removed Sudan from its state sponsors of terrorism blacklist, another move Khartoum hopes will unlock debt relief and international funding.
Sunday’s move follows the appointment of a new government earlier this month tasked with tackling the economic crisis.
The cabinet announcement came amid sometimes violent protests flaring in several parts of Sudan over the skyrocketing costs of living.
The central bank also said Sunday it was imposing restrictions on hard currency movements including banning people departing Sudan from carrying more than $1,000.