The Impact of Overvalued Exchange Rate Policy on Agricultural Trade in Sudan
Abstract
204 words
Since political situation has indicated that South Sudan would
separate from the Sudan and the expectations of the country to
lose its major source of foreign exchange from oil exports, the
exchange rate of the Sudanese pound has deteriorated sharply.
The main objectives of the study were to assess the responses
of some economic variables (supply and demand) of agricultural
commodities to exchange rate overvaluation policy adopted by
the Central Bank of Sudan and their consequences on
agricultural trade of the country. A multi-market model used as
a main tool to assess the macro policy impact on the agricultural
crop markets of the Sudan. The study results demonstrated
that the overvalued exchange rate has a negative effect on the
Sudanese agriculture trade sector, however, the expected more
overvaluation of the currency entails more decrease in producer
and consumer prices and, hence, a general decrease in
agriculture exports as a result of the joint effect of decreasing
supply and increasing demand. On one stream, the supplies of
all crops show various levels of decrease under the
overvaluation scenarios. On the other, all consumers markets
tend to have an increasing demand because of the overvalued
low consumer prices which will enhance consumer’s
accessibility to food markets
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