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Title:The controversy of exchange rate devaluation in Sudan: an economy-wide general equilibrium assessment
Author:Siddig, Khalid H.A.ISNI
Periodical:African Development Review (ISSN 1467-8268)
Geographic term:Sudan
Subjects:exchange rates
monetary policy
External link:https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1467-8268.2012.00320.x
Abstract:The International Monetary Fund (IMF) has worked with Sudan since 1997 to implement a managed float exchange rate. The IMF sees exchange rate flexibility as key to safeguard and rebuild foreign exchange reserves and essential to meet the international reserve target in Sudan. However, authorities in Sudan are concerned about the inflationary pressures that exchange rate flexibility may cause. A review of the literature reflects huge ambiguity about the outcome of exchange rate policies in Sudan. This calls for additional empirical investigations. This paper applies a computable general equilibrium (CGE) model to investigate the possible effects of devaluing the currently overvalued Sudanese pound, by simulating a depreciation of the Sudanese pound by 5 percent, 10 percent and 15 percent. Based on the results, the study recommends that additional flexibility of the Sudanese exchange rate regime as suggested by the IMF be carefully considered if such flexibility devalues the Sudanese pound. Bibligr., note, sum. [Journal abstract]