KHARTOUM  - Sudan's central bank said on Sunday it had decided to weaken the exchange rate at which banks can trade their scarce supply of dollars to an upper limit of 31.5Sudanese pounds per U.S. dollar. The Sudanese pound has plummeted to record lows on the black market this year after it was devalued to 18 per dollar from 6.7 following a call by the International Monetary Fund to let the currency float freely.

The government has ruled out a market-determined exchange rate but introduced a band at which banks can trade dollars, initially at 16-20 Sudanese pounds per dollar.

That band will weaken to 28.8-31.5 pounds per dollar, effective on Monday, Central BankGovernor Hazem Abdelqader told Reuters.

The black market exchange rate on Sunday was 38 pounds per dollar, according to traders.

Abdelqader said the central bank would not allow importers to make deposits with dollars bought on the black market. It would step in to provide liquidity to commercial banks in order to meet import demand, he said.

The central bank has not specified the current level of foreign reserves.

Hard currency remains scarce in the formal banking system, forcing importers to resort to an increasingly expensive black market.

Sudan's economy has been struggling since the south seceded in 2011, taking with it three-quarters of its oil output. But the United States lifted 20-year-old sanctions in October, and the IMF has advised it to embark on sweeping reforms.

Street protests broke out last month after bread prices doubled, following a government decision to eliminate subsidies in its 2018 budget as part of austerity measures.

(Reporting by Khalid Abdelaziz, writing by John Davison in Cairo; Editing by Catherine Evans)

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