The National Bank of Angola (BNA) has decided to adopt a floating exchange rate system because the kwanza was the fourth most overvalued currency in the world, under the fixed exchange rate system in place until 9 January, the governor of the central bank said.
José de Lima Massano also said that in terms of overvaluation the kwanza was behind the currencies of Venezuela, Syria and Yemen, according to a study recently presented by a European institution.
The Governor, who was speaking at the Angolan parliament during the general discussion and approval session of the 2018 budget, reminded Members that the fixed exchange rate system did not drive down prices, and there was a sharp fall in the country’s net international reserves during that time.
“Foreign reserves registered a 33% fall in 2017 and if everything remained the same we ran the risk of seeing these reserves lose 50% of their value,” said Lima Massano, justifying the end of the fixed exchange rate system and replacement with a floating exchange system.
The governor, quoted by Angolan news agency Angop, said that the change in the exchange rate system, which is part of monetary and exchange rate adjustments introduced under the Macroeconomic Stabilisation Programme for 2018, aims to make the Angolan economy competitive in relation to other countries in the region.
Following the adoption of the floating exchange rate system, the kwanza has already depreciated 24.44% against the euro and lost 18.47% of its value to the dollar.
On Thursday one euro was worth 248.77 kwanzas and one dollar 203.61 kwanzas, against 188 kwanzas and 166 kwanzas, respectively, when the exchange rate was set administratively. (macauhub)