Sudan's currency rose against the dollar on the key black market on Monday for the first time in several months after the government reached an agreement with South Sudan on oil fees, dealers said.
The Sudanese pound has been in freefall since South Sudan took away three-quarters of oil production when it became independent a year ago, creating an economic crisis in Sudan.
As well as being a major source of revenue for Sudan, oil also provided dollars badly needed for imports. As the currency has plunged, annual inflation hit 37.2 percent in June, more than double the level of a year earlier and due mainly to the higher cost of imports as the country imports much of its food. High inflation has triggered small anti-government protests.
Sudan and South Sudan agreed at the weekend on how much the landlocked new nation has to pay to route its crude through northern pipelines, ending a row that led to the shutdown of the entire southern output of 350,000 barrels a day in January.
Black market traders said the Sudanese pound had risen to rates of between 5.7 and 5.9 to the dollar, compared to 6.2 last week on hopes that oil flows bringing in dollars would resume soon. Current rates are still well below the official rate between 4.3 and 4.7.
“It's so far psychology,” said one dealer, adding that dollar supplies had also increased because many Sudanese working abroad had returned to visit their families during the Muslim holy month of Ramadan.
“It remains to be seen whether the dollar supply situation will really improve,” the dealer said.
The central bank devalued the pound last month by almost halving its value to try bridge a gap to the black market rate, which has become the benchmark for companies.
It is not clear when South Sudan's oil exports through Sudan will resume as Khartoum is insisting on reaching a border security deal first, a tricky issue as both sides accuse each other of supporting rebels in the other's territory. - Reuters