November 16, 2017 / 5:17 PM / a year ago

Sudan's pound drops on black market, companies halt imports

KHARTOUM, Nov 16 (Reuters) - The Sudanese pound fell to a record low on the black market on Thursday, trading at 27 to the U.S. dollar versus 25 the previous day, prompting large importers to halt activity in an effort to avoid losses.

The pound has dropped in value in recent weeks following a decision by Washington to lift economic sanctions, encouraging traders to expand activity, which put pressure on already-scarce foreign currency.

The United States lifted 20-year-old sanctions and a trade embargo last month, saying Sudan had made progress on counter-terrorism cooperation and in resolving internal conflicts.

The central bank maintains its official exchange rate of 6.7 and says it has no intention to float the pound. However, it is also studying measures to attract investment and improve the economy, which took a blow when the south seceded in 2011, taking with it three-quarters of the country’s oil output.

Measures Sudan is studying include lifting subsidies and taking steps to close the gap between the official and unofficial exchange rates.

“What’s happening is unprecedented - it’s a big jump in the dollar rate amid its scarcity in the market. We expect it to continue to go up. People are even exchanging their savings in fear of losing them,” a black market dealer told Reuters.

Sudan’s year-on-year inflation fell in October, but remained above 30 percent.

“We stopped all sales today so that we wouldn’t face losses because the dollar rate is jumping above estimates and expectations,” said the executive director of a company that imports electrical appliances.

Sudanese importers have long relied on the black market for foreign currency due to its scarcity at banks. (Reporting by Khalid Abdelaziz; Writing by Arwa Gaballa; Editing by Dale Hudson)

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