Sudan’s central bank imposes new currency restrictions on export traders
October 5, 2011 (KHARTOUM) – The Bank of Sudan (BoS) issued a directive this week which will reduce the amount of time export traders have to repay any foreign currency gains that they have in their possession in a new bid to control the shortage of hard currency that have plagued the economy recently.
The central bank allows export traders access to dollars through a letter of credit under the condition that they return the hard currency within a period of six months.
But under the new rules that timeframe has been cut by half to a maximum of three months. This is supposed to make it less likely that the businessmen will utilize their foreign currency holdings to trade on the black market.
Since the oil-rich south seceded last July, Sudan lost its main foreign currency source causing a steep drop in the exchange rate of the pound against the major currencies. Last week the dollar traded for 4.8 Sudanese pounds which is almost twice the official rate of 2.7,
Many people complain that on top of the many restrictions imposed on buying hard currency, it is very common for forex bureaus and banks to say that they do not have enough foreign currency in supply to sell.
As a result, the black market has flourished greatly despite government threats of severe penalties for those trading in hard currency outside the official channels.
The authorities have reportedly stepped up its enforcement which has caused the Sudanese pound to pare some of its losses in recent days.
BoS issued a statement last week saying that the deterioration in the pound’s exchange rate was a result of “temporary” factors including the leakage of Sudanese pounds from South Sudan during the currency conversion process and disbursement of severance pay recently to Southerners who worked in the current government.
BoS added that this led to an increased demand for hard currency and urged citizens to refrain from resorting to the black market and reiterated its commitment to supplying the market with the needed forex.
Prior to the country’s breakup, Sudanese officials said that growing gold exploration projects and payment by South Sudan of oil transit fees for using the North’s pipeline will make up for the lost revenues.
But Khartoum and Juba have so far failed to reach an agreement on how much should be assessed for using the oil infrastructure in the north to sell the south’s oil.
The Sudanese president Omer Hassan al-Bashir said in an interview published last month that unless a deal is reached on this item by end of October, Khartoum will resort to other unspecified options.
(ST)