Angola: Kwanza plunges to record low in April amid fallout from Covid-19
The Angolan kwanza continued to plummet against the U.S. dollar through much of April, as global oil prices collapsed and fears of a severe recession intensified amid the Covid-19 pandemic. On 24 April, the kwanza ended the day at 562.3 per USD, depreciating 7.9% over the same day in March. Furthermore, the currency was 14.8% lower on a year-to-date basis and was down 43.3% in year-on-year terms.
Global crude oil prices dived to over two-decade lows in the second half of April due to evaporating demand, piling pressure on the kwanza. At the same time, the domestic economic backdrop worsened significantly in recent weeks amid strict lockdown measures announced by the government, in turn sparking fears of a severe recession in Angola. This supported investors’ fears and sparked capital outflows out of the country, further hammering the kwanza.
Looking forward, prospects remain bleak. With global commodity markets likely to remain in turmoil for the reminder of the year and domestic activity unlikely to show a marked rebound in the near-term, the kwanza is expected to remain under considerable downward pressure through year-end.