Sudan’s central bank has started circulating new 50-pound Sudanese bills, while withdrawing the old ones, the bank said in a statement late on Wednesday, citing the spread of fake banknotes that have caused an increase in liquidity and pushed prices higher.
Inflation in Sudan rose to 57.65 percent in April, amid rising food prices and an ongoing fuel shortage.
Prices have continued to rise as the value of the Sudanese pound has renewed its fall on the black market, despite government measures to control spending and tighten liquidity.
“It was found that there are large quantities of the 50-pound bill circulating, of which their source is unknown and do not match the technical specifications; Which confirms the leakage of counterfeit currencies,” the statement said.
“This and other factors clearly caused price hikes which directly affected the daily life of citizens.”
The central bank has not yet set a timeline for withdrawing the old 50-pound note, the highest value banknote.
The pound now trades at an average of 29.27 pounds to the dollar in banks, but traders say they sell U.S. dollars for around 38 pounds.
The government is targeting a sharp fall in inflation to 19.5 percent by the end of 2018 from 34.1 percent at the of end of 2017, and has often denied that it plans to float its currency.
“The step to change the currency, is among many steps the central bank has taken to control liquidity, rising inflation and trade in the black market,” said a senior official at a commercial bank, who spoke on condition of anonymity.
“The fear is that these measures might weaken the confidence of people in the banking system … security procedures will not solve the crisis of the dollar scarcity,” the official added.
The United States lifted 20 years of sanctions against Sudan in October, in a move that looked set to help Sudan’s ailing economy, but the country has since plunged into a fiscal crisis, with the Sudanese pound’s value plummeting and no significant increase in foreign investment.