July 18, 2017 / 2:45 PM / 2 years ago

Sudanese pound falls against dollar on black market after sanctions extension

KHARTOUM, July 18 (Reuters) - The Sudanese pound weakened on the black market on Tuesday to 21.5 pounds to the U.S. dollar from about 19 pounds last week, currency traders said, extending a decline that began when the United States postponed a decision on long-awaited sanctions relief.

Sudan’s economic problems have been building since the south seceded in 2011, taking with it three-quarters of the country’s oil output, the main source of foreign currency and government income.

The United States lifted 20-year-old sanctions in January for six months, suspending a trade embargo, unfreezing assets and removing financial penalties that weigh on Sudan’s economy. But it said Sudan had to make progress on key issues, including internal conflicts, before it would lift the sanctions permanently.

Last week, the United States extended the review by three months, citing human rights concerns.

Currency traders said that decision has sent the pound reeling as people buy up dollars amid an ongoing shortage.

“After the U.S. decision, there has been huge demand for buying dollars at any price. There is a panic to buy dollars and a major scarcity of it in the market,” said one black market currency trader.

Sudan’s central bank has held the official exchange rate at 6.7 pounds to the dollar.

“We expect a further rise in the price of the pound currency because the government does not have any money to inject into the banks,” another currency trader said. (Reporting by Khalid Abdelaziz; Writing by Eric Knecht; Editing by Larry King)

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