Rising prices which have triggered unrest in Sudan are being driven by a black market for foreign currency and not by this month's currency devaluation, the state minister for finance said on Wednesday. Street protests have broken out in recent days after bread prices doubled, following a government decision to eliminate subsidies in its 2018 budget as part of austerity measures.
Sudan has devalued its pound currency to 18 per US dollar from 6.7 previously. Hard currency remains scarce in the formal banking system however, forcing importers to resort to an increasingly expensive black market. The currency weakened to 30.5 pounds to the dollar on Tuesday on the black market, where traders say demand has surged as banks remain unable to meet market demand.
Addressing parliament on Wednesday, State Minister for Finance Magdi Hassan Yassin called recent price rises the result of "black market manipulation of the exchange rate" and said the ministry and central bank were working to shut it down, without specifying how. Annual inflation stood at 24.76 percent in November, the latest available reading.
The government has ruled out floating its currency, a measure the International Monetary Fund has urged the country to take as part of broader reforms it says are needed to attract investment and revive its reeling economy. The black market rate for pounds has steadily weakened against the dollar since the devaluation was announced late last month, when it hovered around 25 to the dollar.
"The rise in prices is not related to the devaluation of the official exchange rate from 6.7 pounds to 18 pounds, because there have been government efforts to reduce the prices of staple consumer goods," Yassin said.
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