Sudanese security agents have detained dozens of foreign exchange dealers for black market trading, as the authorities struggle to curb speculation against the pound, brokers said on Thursday. An acute shortage of hard currency has seen the gap between the official and black market rates for the Sudanese pound widen sharply, with the currency losing 60 percent of its value against the dollar in the past six months.
On Thursday, the pound was trading at between 18.70 and 19.10 to the dollar, compared with an official rate of 6.50. "Security agents have arrested more than 40 foreign exchange traders in the past few days for trading on the black market," one foreign exchange broker told AFP on condition of anonymity.
"Trading is very volatile. Every broker has his own rate." The arrests came as the authorities warned of firm action against black marketeers to stem the slide in the value of the pound. "We will adopt new measures against black marketeers as they are indulging in speculation," Finance Minister Badreldin Mahmoud told parliament on Wednesday. "In the coming days we will also set up a special court to prosecute these black marketeers."
In a bid to curb black market trading, the Central Bank of Sudan is offering incentive to overseas Sudanese and foreigners inside the country to exchange their dollars at a rate higher than the official rate. Sudanese banks are offering up to 15.80 pounds to a dollar as part of this central bank policy, bankers said. "But even then banks are not seeing many transactions as there is distrust when it comes to government policies and people still prefer to approach black marketeers," a banker told AFP.
In September, a World Bank report recommended removing exchange controls to unify the official and black market rates. But doing so now officially would require a massive devaluation that would risk fuelling simmering economic discontent. There has been a spate of small-scale protests in recent weeks over government fuel subsidy cuts that have led to spiralling prices.
A previous round of fuel subsidy cuts in 2013 sparked serious unrest that was only suppressed with a deadly crackdown that drew international condemnation. Sudan has been under a US trade embargo since 1997, making international banking transactions cumbersome. The loss of nearly 75 percent of the country's oil earnings with the secession of the south in 2011 has led to further pressure on the foreign exchange market and seen economic growth slow.
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