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International Finance in Strategic Operations Sudanese Market

See attached file.

Prepare a paper on the possibility of entrance into the Sudanese Market. Based on the summary below, please answer the following questions.

Exposition for the individual paper:

Sudan has found deposits of oil and Boron in the extreme southwest of the Bahr Al Ghazal region, near the Central African Republic and Congolese borders. The new Sudanese government has decided to send the exploration rights out to bid. ExxonMobil bid and won the rights to exploit Sudan's newly discovered natural resources. The President of the oil exploration SBU has given you the task to determine the feasibility of operating in Sudan.

A. Using this week's readings, illustrate the shape of Sudan's capital markets by answering the following questions:

1) Describe the financial system.
a. Is Sudan's monetary policy a pegged or crawling system, managed or
independent float, fixed-rate or target-zone arrangement?
b. What are Sudan's Current account, capital account, and balance of
payments with developed countries or regions such as the United States,
Germany, Japan, England, NAFTA countries, or Saudi Arabia? Please pick
any two developed countries and/or regional trade blocks.
c. Who is Sudan's major trading partners, and what is Sudan's Current
Account relationship with them? Is it negative, positive, or neutral?
Describe briefly what a positive, negative, and neutral current account
balance between Sudan and its major trading partners mean. (If there is
more than two, just choose the top two countries.)
d. What is Sudan's relationship to international financial institutions such as
the World Bank, World Trade Organization, International Monetary Fund,
the UN, and/or UNESCO? Is it positive, negative or neutral? Briefly
describe what a positive, negative and neutral relationship would be
between a developing country and any two international institutions.

2) According to Chapter 9 in Shenkar & Luo, pages 237-240, about the Determinants of Foreign Exchange Rates:
a. Which weakness or weaknesses of the Purchasing Power Parity apply to
b. Do these weaknesses undermine Sudan's capital markets?
1. If so, what affect does it have on the capital markets?
2. If not, what characteristic of Sudan's capital markets are able to
withstand the intrinsic weakness of the PPP?
c. Using Interest Rate Parity (IRP) as a guide, determine the stability of the
Sudanese dinar. Compared to its nearest neighbors, how does the
Sudanese dinar rank- more or less stable than its neighbors, or average
among its neighbors?

B. What are the financial implications for ExxonMobil if Sudan's capital markets cannot handle the influx of large amounts of foreign direct investment?


Solution Preview


Capital Markets Analysis: Sudan

Description of Sudan's Financial System

Sudan's monetary policy is the independent float system which is aligned with the country's price stability and economic growth strategies. Specifically, according to the Central Bank of Sudan (2010), the country's monetary and credit policies aim to achieve a real growth rate of 6% in gross domestic product (or GDP) and an inflation rate within the range of 9%. This monetary policy's anchor is the management of Sudan's money supply through indirect controls, financing windows and OMO specifically through targeting the nominal growth rate in money supply of 22.5% (Central Bank of Sundae, 2010).

Sudan's total current account balance for 2008 (This is the latest available data in IMF) was estimated at a negative 1,314 million U.S. dollars (International Monetary Fund, 2010), capital account of positive 223 million U.S. dollars (International Monetary Fund, 2010), and balance of payments is negative 95 million U.S. dollars (International Monetary Fund, 2010). Unfortunately, the IMF data doesn't present the specific breakdown of the current account, capital account, and balance of payments balances of Sudan vis-à-vis its different ...

Solution Summary

The international fiance in strategic operations for the entrance of Sundanese Market is examined.