The second half of the year would see a turnaround from past expansionary policies that had been designed to cope with the global economic slowdown which was now having less of an impact on Sudan, said central bank Gov. Sabir Mohammad Al-Hassan.
Al-Hassan earlier this month said the bank would inject more foreign currency into the market and tighten restrictions on black marketeers — adding those measures would be enough to support the weakening pound.
In the latest statement, Al-Hassan said the central bank was now planning "to review its monetary policy to head toward a policy of austerity".
The fading impact of the global economic crisis on Sudan had "eliminated the reasons behind the expansionary policies of the past two years, of injecting cash into banks and cutting cash reserves, that had affected the rate of inflation and exchange rate alarmingly over the past months."
From early July, banks would have to increase the proportion of their foreign and local currency held as reserves to 11 percent from eight percent.
Larger banks would have to restrict their hard currency trading to three or four branches, and even fewer branches for smaller banks, said the statement.
Sudan appears to have had some success in bolstering its currency in recent weeks. On the black market on Monday, $1 could buy 2.70 Sudanese pounds, compared with 2.85 earlier in the month.
But there has still been a broadly weakening trend in recent months — $1 bought around 2.60 Sudanese pounds on the black market in May.
The Sudanese pound indicative rate stood at 2.3065 to the dollar on Monday, the state Suna news agency reported.
The central bank would now start withdrawing its deposits from banks, said the statement. Some unnamed banks that had received cash infusions to deal with specific problems would be exempted, it added.
Sudan would also review controls on foreign currency trading to consider new ways of strengthening them.
Sudan runs a so-called managed float system, in which the central bank calculates an indicative rate based on previous day transactions and intervenes on the market if quotes break away from a plus/minus 3 percent corridor around that rate.
A World Bank report last week urged Sudan to maintain macroeconomic stability and lessen its economic dependence on oil if it wanted to maintain the past decade's strong growth.
The need to diversify was particularly strong in the country's south ahead of a referendum in seven months' time which could see the underdeveloped region split off as an independent country, the report said. The south is almost entirely dependent on oil for its revenues.
Sudan's economy, under US sanctions since 1997, has thrived with oil exports and foreign investment from Asia and the Gulf supporting an 8 percent real growth rate on average over the past 10 years.
But the sanctions have been costly and have forced the central bank to move its reserves away from US dollars into a basket of other currencies.
