| KHARTOUM, June 11
KHARTOUM, June 11 Sudan's currency has fallen
close to a record low against the dollar on the black market
since Khartoum threatened to halt cross-border oil flows with
South Sudan as import firms fear a dollar scarcity will worsen,
There is little foreign trading in the Sudanese pound but
the black market rate is an important indicator of the mood of
the business elite and of ordinary people wearied by years of
economic crises, ethnic conflicts and wars.
"There is a sense of panic among normal people and import
firms which have been trying to shift pounds into dollars since
the weekend as they expect the currency situation to worsen,"
said one dealer.
"Many people have been trying to buy dollars," said another
dealer, asking not to be named due to the sensitivity of the
The pound has more than halved in value since South Sudan
became independent in July 2011, taking with it three-quarters
of the united country's oil output. Oil was the driver of the
economy and source for dollars needed for imports.
The two former civil war foes restarted in May cross-border
oil flows - the lifeline for both - after ending a row over oil
fees which saw the landlocked South shut down its entire output.
But Sudan warned on Sunday it would close the two export
pipelines within two months unless South Sudan cut ties with
insurgents operating across the shared border. Juba denies the
While industry sources say the oil is still flowing normally
from south to north, the Sudanese pound's exchange rate against
the dollar has fallen to 7.1, down from 6.8 last week, black
market dealers said. The central bank rate is around 4.4.
The rate is watched by foreign firms such as cell operators
Zain and MTN and by Gulf banks who sell
products in pounds and then struggle to convert profits into
dollars. Gulf investors also hold pound-denominated Islamic
bonds sold by the central bank.
Zain, Kuwait's biggest cell operator, reported a 27 percent
fall in first-quarter net profit due to the fall of the Sudanese
Sudan avoided an "Arab Spring" that unseated rulers in
nearby Egypt and Libya but soaring inflation has sparked small
protests against President Omar Hassan al-Bashir, in power since
Sudan has tried to halt the devaluation of the pound by
cracking down on the black market, which has become the
benchmark. Security agents have rounded up dealers since January
but in the absence of fresh dollars from the central bank the
black market is thriving as ever.
The owner of a mobile phone shop in central Khartoum said he
would stop selling new devices until the rate stabilised,
anticipating a further weakening of the pound in coming days.
"This is a disaster," he said, speaking on condition of
anonymity. "The government threat to cut off oil is hitting
business sentiment hard."
"I cannot calculate prices for imported phones anymore. I've
been selling some devices at a loss because the pound is falling
too quickly and I cannot pass on the increases to customers."
(Writing by Ulf Laessing; Editing by Gareth Jones)