Sudan pound gains 8% since oil deal: traders
8/7/2012 12:40:05 AM -
KHARTOUM (AFP) - Sudan's beleaguered currency has gained eight percent on the black market since the weekend announcement of a long-sought oil deal with South Sudan, dealers said on Monday.
The pound traded at 5.7 for one US dollar, against 6.2 before Saturday's announcement of the agreement.
Sudan and South Sudan agreed Juba would pay Khartoum a package amounting to about $3 billion, as well as a per-barrel fee for sending its oil through the north's infrastructure for export via Port Sudan.
Juba said the fee is $9.48 per barrel but Khartoum has not commented on the final figure.
"Traders are worried about the oil deal. They think the government will gain dollars from this agreement, and the rate will come down," one trader on the unofficial market said.
Another black market dealer said most of his fellow traders had put their business on hold, "because they want to see what happens after the oil deal."
A third trader said people in his business "are worried after the agreement was announced" but he added the black market rate normally falls anyway ahead of the Eid festival when expatriates send money home to their families.
The dealers all declined to be named because they work in an illegal trade.
Sudan's currency has plunged in value on the black market since Khartoum lost its largest source of hard currency in July last year, when South Sudan separated with roughly 75 percent of the unified country's oil production before independence.
Khartoum's budget received a further shock when the planned-for oil transit fees from Juba failed to materialise as the two sides could not agree on the amount.
South Sudan shut its oil production in January after accusing the north of theft.
The oil dollars were needed to pay for imports, which have jumped in price and added to inflation which reached 37 percent year-on-year in June, as the government tries to boost exports of gold and other non-petroleum goods.
Trying to address the fiscal imbalance, Khartoum in June announced a series of measures including a devaluation of the pound from 2.70 per dollar to 4.40.
It also sanctioned a trading band that lets the price range to 5.30, closer to the unofficial rate.
The true economic value of the oil deal reached in Addis Ababa is difficult to assess because numbers mentioned by either side are "directed towards the domestic audience," said Magdi El Gizouli, a fellow at the Rift Valley Institute, a non-profit research organisation.
Further uncertainty arises because the settlement has not been signed and will not be implemented unless other issues are resolved, said Sudanese government negotiator Kamal Obeid.
Key among these is security, including South Sudan's alleged backing for rebels inside Sudan, Khartoum says.