KHARTOUM: Sudan began circulating a new currency on Sunday, days after the newly independent south issued its own new money, in a move likely to heighten differences over handling the economic fallout from the split.
South Sudan, which became Africa’s newest nation on July 9, began circulating its new pound on Monday, pegging it one-to-one with Sudan’s existing pound.
Sudan’s central bank on Sunday said it had started circulating 6 billion pounds to gradually replace 11 billion old pounds. It has previously said the exchange would last up to three months.
Analysts say it is crucial for both countries to coordinate to avoid turmoil but so far no deal has been reached with the south over what to do with the estimated 1-1.5 billion old pounds circulating there.
The central bank said the north remained open for more talks or would otherwise speed up replacing the existing currency as precautionary measure so the old notes traded in the south would be worthless in the north.
"We will undertake all precautionary measures to protect the Sudanese economy, and I hope that we will reach a satisfactory agreement for both sides regarding the pound circulating in the south," Deputy Governor Badr Al-Din Mahmoud said in a statement.
Assistant central bank governor Al-Nur Abdelsalam Al-Helu earlier said the north would not allow the import of old pounds circulating in the south.
The old Sudanese pound has been falling on the black market in Khartoum for weeks as economists say foreign currency inflows needed for imports will decline alongside falling oil revenues.
On the black market in Khartoum a dollar buys 3.4 or more Sudanese pounds, well above the official rate of almost 2.7.
The old pound has also fallen in the south on worries the old notes will be worthless.
The north lost about 75 percent of Sudan’s 500,000 barrel-a-day oil output with southern independence under a 2005 peace deal that ended decades of civil war.
Khartoum will get transit fees as the south needs northern refineries and the only port to sell the oil but these are likely to be lower than the current 50-50 split.
Analysts say the north might use the fate of the old Sudanese pounds circulating in the south as a bargaining tool in talks how to divide oil revenues, other assets and debt.
Apart from economic issues, Sudan and the south have yet to end tensions and violence along parts of their border. –Additional reporting by Maaz Al-Nugomi.
