Angolan currency regaining value as economy grows

14 June 2010

Luanda, Angola, 14 Jun – Angola’s kwanza currency has been regaining ground against the dollar in recent weeks after a prolonged downward trend, benefiting from the better situation of the country’s international reserves, economists from BPI bank assert.

BPI’s most recent situation report on the Angolan economy, published last week, stresses that since mid-April the exchange rate has been at just under 93 kwanzas per US dollar, an improvement of about 3.9 percent over the beginning-of-year figure.

“This trend inversion throughout the last month indicates less pressure on the exchange rate,” the report states.

The kwanza had been losing value since mid-2009, when the problem of Angola’s foreign currency reserves became more acute due to falling prices and oil exports, which are now back to the normal level of recent years.

After performing positively in 2008, “the contraction of export activity led to a deterioration of the current balance in 2009 and an erosion of international reserves,” the bank indicates, adding that the International Monetary Fund’s support programme has provided “important assistance”.

The recovery is related to increased oil revenues, “which have enabled international reserves to be stabilised,” explain the economists from BPI’s economic and financial studies department.

“It is hoped that as exchange reserves recover the authorities will resume a policy of maintaining a stable exchange rate versus the dollar,” the report states.

According to the International Energy Agency, Angola produced an average of 1.92 million barrels of oil per day in the first quarter, slightly more than government and IMF forecasts.

Compared to last year, production is up 14 percent.

Forecasts for the Angolan economy have indicated growth of around 7 percent. The IMF maintained its figure unchanged in the latest “Regional Outlook” for Africa, published at the end of May.

The government is expected to present a revised 2010 state budget in July, which may upwardly revise economic growth and fiscal revenues, “reflecting the favourable evolution of the export sector,” the report states.

The three main international rating agencies recently gave Angola a sovereign debt rating in line with expectations, facilitating the state’s access to the international credit market so it can obtain resources needed for projects to rebuild the economy. (macauhub)