Sudan pound declines as afflicted by fragile economy

GMT 02:07 2015 Tuesday ,18 August

Arab Today, arab today Sudan pound declines as afflicted by fragile economy

Sudan pound
Khartoum - XINHUA

The Sudanese pound has been recording unprecedented decline against foreign currencies, with exchange price of a U.S. dollar amounting to 9.8 Sudanese pounds Monday on the parallel market compared to the official price of 6.6 pounds.

During the past two years, the dollar's exchange price against the Sudanese pound on the black market kept fluctuating between 8 and 9.4 pounds, but this is the first time it is close to 10 pounds.

A number of currency dealers on the parallel market told Xinhua that the major currency speculators control the price, expecting the dollar exchange price to surpass 10 Sudanese pounds due to scarcity in foreign currencies and the increasing demand for them in the Sudanese market.

"What is happening now can be regarded as the biggest decline for the national currency against foreign currencies. This is a surprising and unexpected matter," Al-Haj Mohamed, a currency dealer on the parallel market, told Xinhua.

"The major speculators in the exchange market are responsible for this unprecedented decline in the price of the Sudanese pound against foreign currencies. They control the market. The state has failed to implement decisions to curb up the activities of the speculators to stabilize the exchange price of the national currency," he added.

Adil Omer, another currency dealer on the parallel market in Khartoum, for his part, expected the dollar exchange price to go beyond 10 pounds due to the scarcity and increasing demand for foreign currencies.

"There is an increasing demand for the dollar combined with a great scarcity at the same time. All indicators signal an unprecedented decline in the Sudanese pound's exchange price against other currencies, particularly the dollar," he noted.

He went on saying that "the polices of the Central Bank of Sudan regarding the opening of credits for imports from abroad pushed the importers to look for the dollar on the parallel market, which led to the rise in the dollar's exchange price against the national currency."

In the meantime, Abdul-Khaliq Mahjoub, a Sudanese economic expert, speaking to Xinhua, attributed the continuing decline in the exchange price of the Sudanese pound against other currencies to the U.S. sanctions imposed on Sudan, namely the ban on bank transfers.

"The ban on bank transfers from abroad has contributed to the creation of great scarcity in the dollar, which pushed some to open other channels parallel to the banking system. A number of trends tended to open accounts in capitals of Sudan's neighboring countries due to lack of dollar transfers to Khartoum," he added.

Sudanese economic observers, meanwhile, are concerned that the great rise in the exchange prices of foreign currencies would impact the local market and lead to a great rise in the prices of consumption commodities, particularly the ones imported from abroad.

To this end, Abdul-Rahim Al-Sunni, a Sudanese analyst, told Xinhua that "we are concerned that the rise in the dollar exchange price will affect the prices of commodities, " said Al-Sunni.

The secession of South Sudan in 2011 has badly affected the Sudanese economy as the country lost around 70 percent of its oil revenues, creating a big gap in the foreign exchange market and the exchange rate.

The separation has also negatively affected the state budget which dropped to around 50 percent, causing a huge budget deficit.

The Sudanese government has adopted a package of economic measures to revive the economy including an increase in the oil prices, but those measures have not prevented the Sudanese pound from declining.

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