Angola: Kwanza depreciates further amid controlled exchange-rate adjustment
The Angolan kwanza slid further in recent weeks as the Central Bank (Banco Nacional De Angola, BNA) continued to pursue its controlled adjustment of the exchange rate with the aim of gradually eliminating the difference between the official exchange rate and the black-market rate. To mitigate risk of substantial depreciation, the Bank has de facto capped the maximum depreciation of the exchange rate against the euro at 2.0% per auction.
During its latest auction held on 12 September, the National Bank of Angola provided commercial banks with USD 40 million with a weighted average exchange rate of AOA 287 per USD in the auction, down 9.9% month-on-month. Furthermore, the currency was down 72.4% year-to-date and in year-on-year terms. As a result, the gap between the official and black-market exchange rates has diminished further: At the beginning of September the kwanza traded at AOA 365 per USD in the parallel market, according to local media reports.
In the face of the government’s recent decision to seek financial support from the IMF in exchange for commitment to structural reforms, the transition to a fully free-floating exchange rate regime seems more certain than ever. The Bank of Angola, however, will have to further reform the current mechanism, including the elimination of direct sales to priority sectors, in particular the oil sector.