Sudan said on Monday it would pour more dollars into its economy and warned dealers not to exploit a rise in demand for foreign currency after the secession of the country’s oil-rich south.
Sudan has been hit by a scarcity of dollars that analysts say could get worse after South Sudan took away 75 per cent of oil production when it became independent on July 9.
South Sudan relies on northern oil facilities and refineries to sell the oil but analysts say Khartoum will probably get less for usage fees from the South than the equal split of oil revenue agreed to under a 2005 peace deal.
Falling oil revenues would make it more difficult for the north – where 80 per cent of 40 million Sudanese live – to get foreign currency needed for imports in a country weighed down by years of conflict, high inflation and a U.S. trade embargo.
The central bank in Khartoum said it was able to meet a rising demand for dollars due to “speculators” and southerners who get their final paycheques in hard currency before returning home.
In July, the central bank poured more than $500-million into banks to stabilize the currency on the key black market at a rate of a dollar buying around 3.4 Sudanese pounds. This week some black market traders cited rates of 3.45 or 3.5, well below the official rate of around 3.
“Speculators of foreign currency through illegal and unlicensed channels will be imprisoned and face confiscation,” the central bank said in a statement.
Annual inflation was 15 per cent in June after 9.8 per cent in November when the central bank effectively devalued the pound to erase the need for a black market, a measure that has had little success.
Both Sudans are currently launching new currencies after the South became independent, moves that carry risks for both sides without co-ordination.
There is also no sign of progress on how to share oil revenues in future between the two countries.
The South has rejected a northern proposal to charge a usage fee for its oil facilities of more than a third of the South’s current export value, based on Reuters calculations.