Tuesday 28 May 2024

Sudan circulates new currency

Khartoum, July 24, 2011

Sudan on Sunday began circulating a new currency days after the newly independent south issued its own new money, in a move likely to heighten differences over handling the economic fallout from the split.

South Sudan, which became Africa's newest nation on July 9, began circulating its new pound on Monday, pegging it one-to-one with Sudan's existing pound.

Sudan' central bank on Sunday said it had started circulating six billion pounds ($2.24 billion) to gradually replace 11 billion old pounds. It has previously said the exchange would last up to three months.

Analysts say it is crucial for both countries to coordinate to avoid turmoil but the Khartoum-based central bank said no deal has been reached with the south over what to do with the estimated 1-1.5 billion old pounds circulating there.

"Officially, we won't allow the old currency to enter (the country), any such entering from the south would be considered illegal," Al-Nur Abdelsalam El-Helu, assistant central bank governor told reporters in the northern capital. "We haven't reached an agreement with the southern government," he said.

The central bank called the northern action a "precautionary measure" after the south went ahead earlier than expected with its own currency launch.

The old Sudanese pound has been falling on the black market in Khartoum for weeks as economists say foreign currency inflows needed for imports will decline alongside falling oil revenues.

On the black market in Khartoum a dollar buys 3.4 or more Sudanese pounds, well above the official rate of almost 2.7.

The old pound has also fallen in the south on worries the old notes will be worthless.

The north lost about 75 per cent of Sudan's 500,000 barrel-a-day oil output with southern independence under a 2005 peace deal that ended decades of civil war.

Khartoum will get transit fees as the south needs northern refineries and the only port to sell the oil but these are likely to be lower than the current 50-50 split.

Analysts say the north might use the fate of the old Sudanese pounds circulating in the south as a bargaining tool in talks how to divide oil revenues, other assets and debt.

Apart from economic issues, Sudan and the south have yet to end tensions and violence along parts of their border. – Reuters

Tags: Currency | sudan | khartoum | South |


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