Central Bank freezes work of market moderating committee
The Central Bank of Sudan has frozen the work of the Market Makers Mechanism that was established in early October last year to decide on the daily US Dollar rates, for an indefinite period. The confidence in Sudan's banks is not easily restored.
The head of the Market Makers Committee (MMC), Feisal Abbas, attributed the rise of the Dollar price in the parallel markets of Sudan to price speculations, and distortions affecting the mechanism's work, including the lack of hard currency in the country. This has contributed to the creation of two prices for the Dollar” one for cash and the other for bank cheques.
In October last year it became clear that the MMC, established by the Sudanese government earlier that month to determine foreign exchange rates has failed to curb the increasing US Dollar (USD) rates against the Sudanese Pound (SDG) in the parallel forex market.
In the beginning the MMC determined the foreign exchange rates of the Sudanese Pound against the US Dollar at SDG 47.5. While the rate has been unchanged until now, the ongoing economic malaise in Sudan coupled with a chronic shortage of ready cash drove the rate of the Sudanese Pound against the Dollar to SDG 73 for cash, and SDG 90 for cheques in March this year.
Confidence in banks
Sudanese economists have stressed the difficulty of restoring confidence in banks and the banking system in the short term, attributing the reasons for the deterioration of confidence to the increasing embezzlement, forgery of accounts, and loss of customers' confidence in the secrecy of their financial affairs.
In addition they pointed to the bankruptcy of some banks and financial institutions and their inability to meet the benefits of customers in full.
“The cash shortage has hit the banking system with a completely paralysing effect.” - Hasan Mohamed Kheir, Omdurman Islamic University
The dean of the Faculty of Economics and Political Science of the Omdurman Islamic University, Hasan Mohamed Kheir, explained in a workshop in Khartoum on Thursday that the shortage of cash in such a short period “hit the banking system with complete paralysis”.
He stressed that customers are harmed by resulting deficits when large sums of money are disbursed from banks.
As reported by Radio Dabanga last week, the inflation rate in Sudan rose to 44.29 per cent in February – a month-on-month rise of 1.93 per cent from January.
The Central Bank of Sudan (CBoS) has directed some banks not to feed their ATMs with cash and stop the transfer of balances by telephone. This has blocked people from withdrawing cash from the machines, as in several states and towns of Sudan the banks have been ordered to set a maximum daily amount for withdrawal from ATMs.
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