Angola: Angolan Central Bank devalues kwanza amid deepening financial crisis
April 20, 2016
The Angolan kwanza (AOA) continued losing ground against the U.S. dollar in April, thus continuing the trend that began in mid-2014. The fragile currency reflects the difficulties Angola is facing amid depressed oil prices and acute shortage of foreign currency. On 19 April, the Angolan kwanza traded at 165.7 per USD, which was 4.3% weaker than on the same day in March and a stark 51.8% weaker on an annual basis. The AOA has lost 22.6% of its value since the start of this year.
The ongoing depreciation of the kwanza follows the latest decision by the Central Bank (Banco Nacional de Angola) in early April to devalue the currency in the interbank market. The Bank has devalued the kwanza three times this year with the most significant devaluation occurring in January. The kwanza has faced substantial pressure as a deterioration of Angola’s oil revenues has dried up dollar liquidity in the market. Limited dollar supply coupled with foreign exchange restrictions has contributed to the development of a thriving parallel market where the premium for U.S. dollars is significantly higher than at the official exchange rate as the Central Bank has been artificially supporting the kwanza at current levels.