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18 Aug 2009 10:54
Angola’s central bank is not planning to devalue the kwanza and will resist speculative attempts to weaken the national currency, the bank’s deputy governor Ricardo Viegas de Abreu said on Tuesday.
Angola relies on oil for 90% of its revenues and those have fallen along with oil prices earlier this year. The decline sparked sales of the kwanza for dollars on fears of a kwanza devaluation.
“Banco Nacional de Angola has resisted those speculative attempts and there are no plans to devalue the national currency,” Abreu said in comments broadcast over state-owned Radio Nacional de Angola.
“We all know there was a sharp drop in our revenues and our foreign exchange reserves but we have the conditions to stabilise the currency at the current level.”
The rush to buy dollars forced Banco Nacional de Angola to devalue the kwanza by 4% in April to 78 per US dollar.
In the black market, the kwanza is trading at around 92 per dollar due to a shortage of the greenback in the banking system.
Faith in kwanza
The dollar shortage was caused by the central bank’s decision to limit the amount of dollars it supplies to commercial banks at its daily auctions.
The Association of Angolan Banks (ABANC) urged the government in May to review its monetary policies, including limits on the sale of US dollars, as it was hurting businesses that rely on dollars to pay for goods and services from abroad.
The kwanza is not a valid currency outside Angola.
Despite the recent devaluation and dollar shortage, Abreu said conditions for banks should improve by the end of the year. He also called on Angolans not to lose faith in the kwanza.
“We shouldn’t stop believing in the kwanza because of that. The kwanza is our traditional currency,” he said.
“We are taking measures that will enable us to stabilise [the kwanza] and provide comfort for all the players in the market. We think we will have a more positive end to the year.”
Angola, which rivals Nigeria as Africa’s biggest oil producer, has seen its foreign exchange reserves slump by 30,5% to $12,1-billion in June, versus $17,499-billion in December, according to the central bank website.
Crude oil recovered to $67 per barrel on Tuesday but is still trading at less than half of last year’s high of more than $147 per barrel.—Reuters
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