Sudan asks to deal with China in yuan and pounds: central bank

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Sudan is in talks with China to see if the two countries can do business in Sudanese pounds and Chinese yuan, rather than U.S. dollars, Sudan’s central bank governor said on Wednesday.

The Sudanese pound has weakened sharply against the dollar on the black market since South Sudan seceded in July, taking about three-quarters of the country’s roughly 500,000 barrels per day of oil output -- a major source of foreign currency.

China has been a major investor in both African countries in areas including construction and oil.

“We have submitted an official request to China to deal with them in Sudanese pounds and Chinese yuan, and it is possible that after a short while we could exit finally from the dollar,” Central Bank Governor Mohamed Kheir al-Zubeir told reporters.

“The dollar has become weak and is deteriorating.”

He said Sudan’s central bank was discussing the issue with China’s central bank, but did not give a timeline or other details about the proposed arrangement.

“We believe that very soon China will become the number one economic power in the world,” Zubeir said.

The loss of oil revenues has helped to drive up the cost of food and other imports, fuelling inflation and biting an economy already hit hard by decades of war, mismanagement and U.S. trade sanctions.

Sudanese officials say they plan to implement an austerity program and make up for lost oil revenues with agriculture, gold, and other sources of income.

South Sudan broke away in July after voting for independence under a 2005 peace deal that ended decades of civil war between north and south.

Sudan was China’s sixth biggest source of imported crude oil last year -- before the split -- when it supplied 12.6 million tons, compared with 44.6 million tons from the top supplier, Saudi Arabia.

Khartoum’s proposal to China does not include at all South Sudan which is fully independent, has its own currency, and has scant policy coordination with its northern neighbor.