The south Sudan state has recently announced that it was planning to launch a new currency to replace the Sudanese pound circulated there, while in response, the Central Bank in north Sudan declared its intention to launch a new currency to replace the current one.

The “war of currency” has become the term for the newest confrontation between north and south Sudan, which have became two separate states since July 9, after Khartoum and Juba decided to break the link in dealing with the Sudanese pound and issue two new currencies.

The sudden move by south Sudan and the quick response by north Sudan prompted concerns over negative impacts on the economies of both countries at a time when the south Sudan population is circulating a cash mass worth of two billion Sudanese pounds ( about 700 million U.S. Dollars).

In this respect, Dr. Mohamed Al-Nayer, a Sudanese economic expert, held the south Sudan state’s government responsible for launching the “war of currency.”

“The ill intention by the government of the south was available in great percentage,” Al-Nayer told Xinhua.

“There was an agreement in advance on dealing with the Sudanese pound for six months. The south Sudan state has backtracked from the agreement and surprised the world with a currency that was ready and subject to circulation as of current July 18,” he added.

“The south’s rush to print and circulate a new currency would have negative impact on the economy of the north, which would lead to an increase in the exchange price and the necessary commodity price,” he said.

Al-Nayer further criticized the previous agreement between north and south Sudan on dealing with the Sudanese pound for six months, saying that “this agreement is unsound in terms of economic standards because circulation of one currency in two separate states is unsound.”

He further reiterated that there were logical reasons for South Sudan to issue a new currency, saying “issuing of a new currency would avail the opportunity for South Sudan to remove whatever points to South Sudan culturally or symbolically in the Sudanese currency.”

“Additionally, the change of the currency avails the opportunity for producing a currency of highly security standards and unsusceptible to forgery, particularly that the Sudanese currency has come through organized forgery in many occasions in the past period,” he noted.

Al-Nayer stressed the importance for the concerned authorities in Sudan to speed up replacement of the old currency and declare it as illegal tender banknotes, saying “I advise the government of Sudan that the period for replacing the old currency should not exceed two to three weeks maximum and then it should declare the old currency as illegal tender banknotes.”

“Speeding up the replacement of the old currency with the new one is likely to block the way before any endeavor by the South Sudan government to transfer the cash mass it has to the north to replace it with the new currency. However, if the replacement process lasted for three months, the cash mass in the south would come to the north,” he said.

Dr. Al-Nayer, meanwhile, downplayed the south Sudan state’s move of launching its pound with the same value of the Sudanese pound, saying that “the south Sudan government has selected the shortest ways to convince the southern Sudanese citizens to withdraw the old pound from them and replace it with a new one to avoid many problems with its citizens.”

He expected that the southern Sudan pound would be less in value than the Sudanese pound as for lack of reserve of foreign currency in the south Sudan state because it is a new born state besides lack of any kind of production in the south.

“South Sudan pound will be less in value than the Sudanese pound at the short term for many reasons including that South Sudan is a new state and does not have a reserve of foreign currency besides lack of enough production. Therefore, the south will suffer a great gap in commodities and services,” he said.

“The real strength of South Sudan’s pound would appear after completion of the currency replacement in South Sudan. South Sudan ‘s pound may become strong at the medium and long term, but this depends on the ability of south Sudan government to run the economy and secure a considerable reserve of foreign currency,” he said.

In the meantime, Somia Sayed, a Sudanese economic analyst, for her part, declaimed to term the move by north and south Sudan states to replace their currencies as a “war of currency.”

“I’m not inclined to call this matter the (currency war) because each country is supposed to have its own currency and to adopt all the necessary measures to protect its economy,” she told Xinhua.

She reiterated that the decision of the government of Sudan to replace its old currency with a new one was a correct economic decision, saying that “it would have been disastrous for north Sudan if the south managed to launch its currency first.”

Juba, capital of the south Sudan state, on Monday started launching its new currency, the pound, which bears the photo of late John Garang, the historical leader and founder of the Sudan People’s Liberation Movement (SPLM), where the banks in the south started the process of replacing the old currency with the new one prior to be circulated as of this week.

Governor of the Central Bank of Sudan, Mohamed Khair Al-Zubair, in turn, announced on Saturday, the launch of a new currency at all the branches of the bank prior to the beginning of replacing the old currency with the new one through the official channels during a period that would not exceed three months, saying the cost of the print of the new currency amounted to 40 million euros (57.2 million U.S. dollars).

Speaking at a press conference, Al-Zubair reiterated readiness to cooperate with South Sudan to restore the old currency currently circulated in the south.

Preliminary indications showed that the south Sudan state would lose about 700 million dollars because of the replacement of the old currency which constitutes the cash mass currently being circulated in the south.

Source:Xinhua