Sign in
RSS

December currency review: Sudan pre-announces devaluation

The Sudanese pound wasn't quite the world's weakest currency in December, as our first table shows, but it is almost certain to be in that ignominious position this month, assuming the government sticks to its plans for a major devaluation. In an unusual move, the finance ministry in Khartoum pre-announced (on 26 December) that the Sudanese pound's official exchange rate against the US dollar would be slashed to USD 1 / SDG 18 (from the current SDG 7) sometime during the first week of January. As we reported last month, Sudan has been under pressure from the International Monetary Fund to unify official and unofficial exchange rates in order to attract investment and ease economic imbalances. However, the IMF wants Sudan to allow the pound to float freely, but the country's finance minister ruled that out, so official rates could well diverge from black-market rates again in the future.

The Pakistani rupee, also a big faller last month, may already be floating in practice. Although there was no official announcement of a fixed change in policy, the central bank did say that it had effectively left exchange rates to be dictated by market forces recently and that it intended to continue that practice as much as possible from now on. Again, the main influence appears to have been the IMF, which is providing financial aid to Pakistan.

The Argentinian peso took top spot in the currency losses stakes in December, after authorities there announced that the target date for reducing inflation to 5% (it currently stands at 22.3%) would be delayed by a year to end-2020. This eases pressure on the central bank and could allow for interest-rate cuts, which would push inflation up again before it comes down.

Countries experiencing largest currency losses in December
Country
Currency code Movement v EUR
4 Dec 2017 - 1 Jan 2018 (%)
Inflation
(%)
Argentina ARS -10 22.3
Mexico MXN -6 6.6
Pakistan PKR -6 4.0
Sudan SDG -6 24.8
Ukraine UAH -5 13.6

The world's strongest currency in December was the South African rand (along with the pegged currencies of three neighbouring countries). The bounce was driven by politics, following the narrow victory of Cyril Ramaphosa in the ruling ANC Party's leadership election. Investors are now hopeful that there could be an early end to the presidency - and disastrous economic policies - of Jacob Zuma.

The Botswana pula was also boosted by the news from South Africa, while the Chilean peso's surge in December was driven by copper prices reaching their highest levels for four years.

Countries experiencing largest currency gains in December
Country
Currency code Movement v EUR
4 Dec 2017 - 1 Jan 2018 (%)
Inflation
(%)
Botswana BWP +4 3.0
Chile CLP +4 1.9
Georgia GEL +4 6.9
Lesotho LSL +9 5.6
Namibia NAD +9 5.2
South Africa ZAR +9 4.6
Swaziland SZL +9 5.4

In other currency-related news, authorities in Mauritania have struck a zero from the old ouguiya (effective 1 January 2018) to create the new ouguiya. Old can be exchanged for new at the rate of ten to one until end-June 2018, after which the old currency will no longer be accepted.

Finally, here is this month's selected currency movements table:

Selected currency movements (v EUR)
Country Currency code % movement to 1 January 2018 v EUR since: Latest official annual inflation (%)
    4/12/17
(1 month)
2/10/17
(3 months)
3/7/17
(6 months)
2/1/17
(12 months)
 
Argentina ARS -10 -10 -20 -36 22.3
Australia AUD +2 -2 -3 -5 1.8
Brazil BRL -2 -6 -5 -16 2.8
Canada CAD +1 -2 -1 -6 1.4
Chile CLP +4 +2 +3 -5 1.9
China CNY +1 +1 -1 -7 1.7
Egypt EGP -1 -2 -3 -11 26
India INR +1 +1 -3 -7 4.9
Indonesia IDR -1 -2 -7 -15 3.3
Japan JPY -1 -2 -5 -10 0.5
Kenya KES -1 -1 -4 -14 4.7
Korea Republic KRW +1 +5 +2 -1 1.3
Mexico MXN -6 -10 -14 -8 6.6
Nigeria NGN -1 -2 -15 -34 16.3
Norway NOK 0 -5 -3 -8 1.1
Philippines PHP 0 0 -4 -15 3.3
Poland PLN +1 +3 +1 +5 2.6
Russia RUB +1 -1 -2 -8 2.7
Singapore SGD 0 0 -2 -5 0.7
South Africa ZAR +9 +7 +1 -3 4.6
Sweden SEK +1 -2 -2 -3 1.9
Switzerland CHF 0 -2 -7 -9 0.8
Turkey TRY +3 -8 -13 -22 13
United Kingdom GBP -1 -1 -1 -4 3.1
United States of America USD -1 -2 -5 -14 2.2
Venezuela VEF -1 -2 -5 -14 741
Like this article? Share it... Twitter Facebook   LinkedIn