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Sudan's currency rises on oil export deal with South
April 24, 2013 / 12:06 PM / 5 years ago

Sudan's currency rises on oil export deal with South

* Sudan suffers from severe currency shortages

* Sudan’s pounds up on oil deal with South Sudan

By Khalid Abdelaziz and Ulf Laessing

KHARTOUM, April 24 (Reuters) - Sudan’s currency has risen around 15 percent on the black market since a deal with South Sudan to restart oil flows but dealers say the expected inflow of petrodollars will not end severe hard currency shortages.

There is little trading in the Sudanese pound but its black market rate against the dollar is watched by foreign firms which sell products in pounds but often struggle to convert their revenues into dollars. Companies operating in Sudan include cellphone operators MTN and Zain, airlines such as Lufthansa and Turkish Airlines, and Gulf-based banks.

Analysts blamed currency losses in the African country for a 32 percent profit drop in fourth quarter profit at Zain, which is headquartered in Kuwait.

Last month, Sudan and South Sudan agreed to resume oil exports from the landlocked South, under which Juba will pay in dollars to use Sudan’s export facilities.

Since the news, a dollar has bought between 6 and 6.2 pounds, compared to around 7 previously, black market dealers said. This is still well above the official rate of around 4.4 pounds.

“The rise is driven so far only by hope. The central bank has not pumped any money yet,” said one dealer.

Another dealer said the dollar would bounce back once it became clear that the expected inflows from pipelines and port fees would not end Sudan’s dollar shortages.

Sudan is facing an “agricultural financing crisis” because it needs $1 billion to import food annually, al-Sahafa newspaper quoted agricultural minister Abdel Halim al-Mutaafi as saying.

Sudan’s economy was thrown into turmoil when South Sudan took away three-quarters of the formerly united country’s oil output with its secession in July 2011.

As well as being a major source of revenue for Sudan, oil also provided dollars needed for imports. Annual inflation almost hit 50 percent in March, up from 15 percent in June 2011, the last data before southern independence.

The black market rate is also an important indicator of the mood of the business elite and ordinary people exhausted by years of economic crises, ethnic conflicts and wars.

Sudan avoided the “Arab Spring” revolts which unseated rulers in Egypt and Libya but soaring inflation has sparked small protests against President Omar Hassan al-Bashir. (Reporting by Khalid Abdelaziz and Ulf Laessing; Editing by Catherine Evans)

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