Angola: Kwanza weakens further amid controlled exchange-rate adjustment
The Angolan kwanza weakened 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 gap 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 October, the National Bank of Angola provided commercial banks with EUR 15.5 million with a weighted average exchange rate of AOA 349.2 per EUR in the auction.
On 12 October the currency traded at AOA 304.7 per USD. The currency was down 6.5% in month-of-month terms and it lost nearly half of its value in year-to-date and in year-on-year terms. As a result, the difference between the official and black-market exchange rates has diminished further: At the beginning of October the kwanza traded at AOA 360 per USD in the parallel market, according to local media reports.
The determination to move to a fully free-floating exchange rate regime has gained further credibility following the government’s decision in August to seek financial support from the IMF in exchange for commitment to structural reforms.