Angola: Angolan kwanza falls to record low in July
July 15, 2015
In July, the Angolan kwanza (AOA) lost ground against the U.S dollar, thus continuing a trend that began in mid-2014. The currency reached an all-time low on 14 July when it traded at 124.8 AOA per USD. The figure was 5.5% weaker than on the same day in the previous month and 28.5% weaker on an annual basis. The depreciation of the kwanza underlines the economic difficulties that the country faces amid falling oil prices and strapped government finances.
On 27 June, the Central Bank of Angola hiked its monetary policy rate for a second time this year to fight high inflation. Earlier last month, the Bank devalued the currency by about 5.8% as the drop in oil prices has taken a toll on government revenues and exports. Following the Bank’s move, on 5 July the kwanza traded at 116.9 against U.S. dollar. Angola is struggling to cope with low oil prices that have dropped more than 40.0% over the past year. Against this backdrop, in February, the government cut its 2015 budget by 26% while forecasting the fiscal deficit to widen significantly this year.
Author: Dirina Mançellari, Senior Economist