Decline of SDG Value under War

Dr. Adel Abdul Aziz Al-Faki

The value of foreign currencies has increased, particularly the US dollar against the Sudanese pound, as the value of one dollar in the third week of this November has reached the equivalent of 1,050 Sudanese pounds in the parallel (black) market, while the official price stands at 763 Sudanese pounds against the dollar.
This rise, the largest of its kind, is a natural result of the continuation of the war in Sudan, which has entered its seventh month, as it is believed that the Central Bank of Sudan is no longer able to control the value of the Sudanese currency against foreign currencies, according to the flexible, managed exchange system that it follows as a monetary policy.
The main reason for the Bank of Sudan’s inability to control the currency is the decline in its foreign exchange and gold reserves, which came from three main sources: the first was export revenues, the second was the state’s oil sales and revenues from a pipeline exporting South Sudan’s crude, and the third was expatriates remittances.
Regarding the first element, related to export revenues, it is noteworthy that Sudanese exports of various commodities have been affected by the war and the interruption of transport and storage chains, in addition to the fact that a significant amount of animal exports go to the Arab Republic of Egypt through the use of local currencies that do not constitute a foreign currency balance with the Arab Republic of Egypt.
As for the second element related to Sudanese crude oil exports and pipeline revenues, they were affected due to the presence of fields and facilities in areas where military battles take place.
About the third element related to expatriates remittances, it is believed that the cessation of ATMs and bank branches played a major role in the weak returns from it, in addition to the direction of some of the remittances to the countries in which Sudanese families sought refuge, such as Egypt, Uganda, and the Arab Gulf states.
The most important negative impact of the decline in the value of the Sudanese currency against foreign currencies is the increase in the cost of imports, particularly agricultural and industrial production inputs, and the increase in the cost of transportation due to the increase in the prices of various fuels. This leads to a decrease in the competitiveness of the Sudanese exportable commodity.
On the other hand, the decline in the value of the Sudanese currency against foreign currencies leads to an increase in the prices of imported food commodities used by the local population, such as bread flour, sugar, edible oils, rice, soap, etc. This leads to an increase in the inflation rate as well. Inflation may return to triple digits, and this is a major economic problem.
It is believed that the solution should be directed towards trying to obtain a foreign exchange deposit of a significant value from a sisterly country such as Qatar, in addition to working to oblige the recovery of the revenue coming from exporters of all commodities, particularly gold. Furthermore, we are working to stop the war by completing the work of the National Army in defeating the rebel Rapid Support gangs. May God bless.

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