South Sudan pound rises after Qatari bank import deal

Reuters News
Posted: Sep 06, 2012 12:37 PM
South Sudan pound rises after Qatari bank import deal

By Mading Ngor

JUBA (Reuters) - South Sudan's currency has risen against the dollar on the key black market, its first gain since January after the government reached a deal with a Qatari bank to provide dollars needed for imports, dealers and officials said on Thursday.

The South Sudanese pound (SSP) has lost sagged against the dollar since the government shut down its oil production in January in a row with Sudan over export fees.

Oil contributed 98 percent of state revenues and was practically its only source of foreign currency. One of the world's least developed countries, South Sudan needs to import almost everything from food to consumer goods.

The SSP had been trading at a rate of 5 or more against the dollar until this week as import firms scrambled to get their hands on the greenback. In January, the rate was 3.55.

But on Thursday, traders on the black market quoted rates between 4.3 and 4.4 after the central bank won support from the Qatar National Bank.

Commerce Minister Garang Diing Akuong said the Qatari bank had agreed to fund imports worth $100 million in hard currency.

Qatar National Bank is one of the few foreign banks active in South Sudan. It mainly focuses on arranging deals to fund imports.

"Many traders who used to go and buy dollars from the black market have now turned to use the credit line that the government has established between these two banks, the Bank of South Sudan (central bank) and Qatar National Bank," he said.

Hopes for a restart of oil output were also supporting the pound. "Those who hoard the dollars in the black market feared that the dollar rate might drop once the production and the exports start," Akuong said.

South Sudan is currently in talks with Sudan in Ethiopia to reach a border security deal required by Khartoum to restart oil exports though northern pipelines.

Last week, the government oil production might need up to six months after a final deal fees with Sudan. The dollar scarcity drove up annual inflation to 60.9 percent in July.

(Writing by Ulf Laessing; editing by Ron Askew)