KHARTOUM: Black market rates for the Sudanese pound hit a record low against the dollar on the black market yesterday as importers struggled to get hard currency, likely adding to pressure on the government to raise state salaries.
There is little foreign or official market trading in the Sudanese pound but its rate on the black or parallel market is an indicator of the mood of the business community and ordinary people tired after years of economic crises and ethnical conflict.
The rate is watched by foreign firms which sell products in pounds but struggle to convert profits into dollars. Cell operators Zain and MTN or Gulf banks such as Dubai Islamic Bank have investments in Sudan.
Sudan has avoided an “Arab spring” like neighbours Egypt and Libya but the government faces dissent over spiralling inflation due to the loss of three-quarters of its oil production when South Sudan seceded in July 2011.
Oil was not only the main source for state revenues but also for dollars needed to fund imports as Sudan produces little. Annual inflation hit 46.5 percent in November, triple the 15 percent in June 2011, the last data before southern secession.
Yesterday, one dollar bought up to 7.1 pounds, passing for the first time the psychological mark of 7. Last week, the rate on the black or parallel market, which has become the benchmark, was around 6.9. At the time of secession it was 3.3.
By contrast, the official rate stands at around 4.4 but it has little value as the central bank and commercial lenders are unable to produce enough dollars through official channels for import firms, traders say.
“It is almost impossible to get dollars in Khartoum and it gets worse,” said a black market trader. “The mood is very bad.”
The opposition has been unable to mobilise mass protests against veteran President Omar Hassan Al Bashir but the pound’s slide has sparked calls even from inside his ruling party to increase salaries in the public sector, where most people work. Analysts say such a move would further fuel inflation and weaken the pound as the central bank would have to print yet more money.
Trade unions also called on the government to increase the minimum salary, state news agency SUNA said. To offset the loss of oil the government has been boosting gold exports and trying to buy up all locally-produced gold — often above the market price, according to industry sources, which is fuelling inflation.
South Sudan was supposed to pay Khartoum to pipe crude exports through Sudan, but the new nation shut down its entire 350,000 b/d output in January in a row over fees. The two signed a series of deals in September that paved the way to restarting exports, but disagreements over how to implement them have delayed the resumption.
Both countries held talks several times this month but have yet to agree on how to set up a border security zone, a move needed to restart oil exports. They will resume talks in mid-January.
Reuters
