Sudanese pound slides on black market amid dollar shortage

Thu Sep 29, 2011 11:29am GMT
 

KHARTOUM (Reuters) - The Sudanese pound extended losses on the key black market due to a shortage of dollars, dealers said on Thursday, as the African country battles an economic crisis and high inflation.

The African country is fighting a crisis that sparked two small protests in the capital Khartoum this week as anger over spiralling food inflation builds up.

It lost 75 percent of oil production when South Sudan became independent on July 9. Juba will have to pay a fee to use northern export facilities but analysts say this will be much less than the existing 50 percent split.

Inflation jumped to 21 percent in August, driven by rising food costs. Sudan needs to import much of its food and consumer articles, which are more expensive due to a shortage of dollars in the country.

The government has launched a package of counter-measures such as temporarily waiving duties for 12 basic food items.

On Thursday, black market traders said one dollar was changing hands 4.5 to 4.8 pounds, well up from 3.9-4.0 a week ago. In August, rates of 3.5 were quoted, still well above the officials rate of around 3.

"It is very difficult to get dollars," said one trader on the black market in the capital.

The central bank has asked fellow Arab states to put deposits in the central bank and commercial lenders to help the economy.

Sudan is also trying to diversify its economy to cut its exposure to oil costs by boosting mineral exports and the agricultural sector, but progress has been slow which experts blame on bad planning and a U.S. trade embargo.

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