Sudanese Pound slumps amid ongoing economic uncertainty
The Sudanese government recently launched another fierce crackdown on currency traders, arresting many and describing them as destroyers” of the economy.
The government first clamped down on currency traders last December and then again last week.
Ahmed Omar, a pseudonym of a currency dealer working near the Arab Market, said he slept in his car, fearing for his life during the government’s crackdown on currency dealers last week.
It became difficult for traders to get dollars from banks so they returned to the black market.”
Omar said the sale price of the dollar rose on March 20, from 6.2 to 6.4 pounds. The exchange rate (of Sudanese pounds) declined because most people have sold all the dollars they have after the announcement of the agreement (on resuming oil trade) for fear of further devaluation of the dollar,” he added.
A shortage of dollars has hit Sudan hard. After the agreement was announced, traders thought that the Sudanese Central Bank would release dollars -- but this did not happen, pushing up demand for the dollar. It became difficult for traders to get dollars from banks so they returned to the black market,” Omar explained.
The Sudanese capital, Khartoum, is beset by economic problems. The Sudanese pound struck new lows on the black market amid concern about the lack of agreement on how to implement the cooperation agreement with South Sudan, suspended since last September.
The African Union (AU) Peace and Security Council has extended the deadline for Sudan and South Sudan to solve their outstanding disputes, giving the two longstanding foes another six months (until the end of July). The decision includes extending the mandate of the mediation committee headed by former South African president Thabo Mbeki.
Sudan’s economic crisis stems from the loss of 75 percent of oil production after the secession of South Sudan in July 2011.
Sudanese economist Mohamed Ibrahim Kapj, who previously worked as a consultant for Liberation and Justice Movement, said the economic crisis would continue as long as the Sudanese government takes a military response.
It is the reassurances of both sides that pumping of South Sudan oil will start soon that has led to a partial recovery of the pound.” He added that the currency has benefited from the recent agreement by the two Sudans, which could allow oil flow to resume very soon. It is the reassurances of both sides that pumping of South Sudan oil will start soon that has led to a partial recovery of the pound,” he said.
The collapse of the (cooperation) agreements between the two countries is a new shock to the two economies, especially Sudan,” he added. The Sudanese pound will continue to drop and will only recover after the resumption of the South Sudanese oil export via Port Sudan,” he explained.
Kapj called the parties to abide by the agreement as a safety valve for the two economies whose peoples are under the poverty line.”
