Sudan set to devalue pound amid oil crunch-sources - Reuters

KHARTOUM May 18 (Reuters) - Sudan, hit by an economic crisis since losing crucial oil revenues, will effectively devalue the pound by allowing foreign exchange bureaux to trade dollars at a level away from the official rate, a banking source and Sudanese media said on Friday.

Sudan's economy has been battered since the country lost three-quarters of its oil production to South Sudan when the latter became independent in July. Even though the pipelines are in Sudan, the two have been unable to agree on how much the South should pay to transport its oil.

South Sudan shut down its output of 350,000 barrels a day in January after Sudan started seizing oil for what the latter calls unpaid fees.

The loss of oil revenues, the main source of state income and dollar inflows, has hit the Sudanese pound hard. One dollar bought 5.5 pounds on the black market on Friday, way above the official rate of around 2.7.

To close the gap the central bank will allow foreign exchange bureaux to use a rate away from the official rate, a banking source told Reuters.

"They hope to attract more money from Sudanese expatriates," said the source, speaking on condition of anonymity.

In a second step, commercial banks would also be allowed to use a dollar rate away from the official rate for some transactions, he said, adding that details were still unclear.

"The exchange rate will be free," Jaafar Abdou Haj, secretary general of the association of foreign exchange bureaux, told pro-government newspaper al-Intibah.

Al-Sudani newspaper said the central bank will devalue the pound on Sunday to 4.9 per dollar.

The central bank could not be reached for comment on Friday, a public holiday in Sudan.