KHARTOUM: Black market currency traders in Sudan put their business on hold Sunday to assess the impact of new government measures aimed at closing a wide gap between the official and unofficial forex rates.
From Monday, official foreign exchange bureaus will be allowed to buy and sell dollars based on the unofficial market rate rather than the official value of 2.7 Sudanese pounds for one dollar, said Abdelmoneim Nour al-Din, deputy general secretary of the forex dealers' association.
He said his association would announce a daily price and start buying at 5.2 pounds per dollar, slightly off last week's black market rate of 5.8 pounds to the dollar.
For the illegal black market traders who do business from street corners or cubbyhole offices, the new rules mean uncertainty.
"We're gonna wait and see," said one, who like many others had suspended operations.
"Today we stopped doing business. We will hold onto the foreign currency we have until the market stabilises" and the new rate becomes clearer, said another trader.
Bankrupt Sudan has lost billions of dollars in oil receipts since South Sudan gained independence last year, leaving Sudan plagued by soaring prices, a severe shortage of dollars needed to pay for imports, and a plunging currency.
The black market rate jumped above six pounds per dollar after South Sudan occupied the north's main oil region of Heglig in April, during border fighting which raised fears of all-out war between Sudan and South Sudan.
The government has stuck to its fixed exchange rate of about 2.7 pounds for one US dollar, but the black market rate has been well above 4.0 since late last year.
Asked whether the new rules for forex bureaus amounted to a devaluation, one economist said the answer was unclear and he was still trying to figure out what had happened.
"This is really legalisation of the black market," said another analyst, University of Khartoum economist Mohamed Eljack Ahmed. He added that the black market rate had essentially become the official rate.
He doubted the new rules will increase the amount of dollars in the economy or bring down the black market rate. Illegal traders would buy from the official dealers and hold their currency to sell at a profit.
At the same time, he said the measures will increase prices of imported goods, adding to the burden of Sudan's poor already struggling with an inflation rate that jumped to 28.6 percent in April.
One black market trader said the illegal rate will fall only if the central bank can inject currency into the market. "If not, the rate will go higher and higher," he predicted.
Local media reports last week said the government had received a large inflow of foreign cash which would help to strengthen the pound.
But if that were the case, the university economist asked, why had the government adopted the new rules for forex bureaus? Even if there had been an inflow of dollars from abroad, the government had not revealed the amount.