This paper aims to empirically investigate the determinants of exchange rate in Sudan and assess their impact on its volatility. The study gains its importance from the fact raised by the advocates of fixed and managed exchange rate systems that such systems can be the right choice for small economies, where an independent monetary policy is difficult to execute. The paper uses the ARDL model to study the relationship between the dependent and independent variables. To specify the determinant factors of the exchange rate the research employs four tests: Wald test, heteroskedasticity consistence covariance (White) test, HAC consistent covariance (Newey-West) test, and inferential statistics. To determine variables that are responsible for longrun fluctuations, the research applies Vector Error Correction (VEC) mechanism and Wald test to examine short-run causality and determine the speed of adjustment of endogenous variables. The study documents that the determinant factors of the exchange rate in Sudan are the balance of trade, gold purchases, money supply, inflation and foreign reserves. The continuous deterioration and fluctuation in exchange rate throughout the period under study suggest that the exchange rate system followed has no impact on the stability of the exchange rate.