The governor of the National Bank of Angola (BNA) dismissed the possibility of a discrete devaluation of the kwanza, the national currency, when speaking at a press conference to present the 2018 Macroeconomic Stabilisation Programme.
José de Lima Massano said that the central bank will create a floating band and that “if this is not exceeded, there will be no intervention,” adding that “it will be the market that determines the kwanza exchange rate and the depreciation of the currency,” according to the Angop news agency.
“Technically, what will occur with the national currency, with the adoption of the flexible exchange rate regime, is the depreciation (loss of real value) or appreciation (valuation) dictated by the market mechanisms of supply and demand,” said Massano.
Finance Minister Archer Mangueira had already admitted in an interview published by The Banker, a Financial Times group magazine, that he was studying the end of indexing the kwanza to the dollar but closely following the currency’s variation to ensure it will not fluctuate uncontrollably.
“Let’s look closely at the big difference between the official and the parallel exchange rate and let the currency float, but this will be done with a watchful eye to ensure that the kwanza’s exchange rate does not become uncontrolled,” said the minister.
In the interview, the Angolan Finance Minister says that the country has “borne a heavy burden for having maintained a fixed rate against the dollar since April 2016,” which caused a huge gap between the official rate of 166 kwanzas to the dollar, and about 430 kwanzas per dollar in black market transactions.
The BNA devalued the currency by 18% in 2009, pressured by the fall in foreign reserves as a result of the economic and financial crisis of 2008, with a similar discrete depreciation of 5.1% in June 2015, with the US dollar worth 117 kwanzas against the previous 111 kwanzas. (macauhub)