Angolan kwanza down at first trading after being out of its peg

Posted 10 January, 2018

Angolan national currency, Kwanza, decreased just during the first auction after the country's central bank abandoned strict pegging to US dollar.

The National Bank of Angola sold EUR 83.65 ($100 million) to commercial banks at AOA 221.26 on average. This is 10.1% down from the pre-auction level of 200.94, source reports.

For reference, the National Bank of Angola has recently announced that it would abandon US dollar peg citing lower international reserve of the country amid the economic crisis caused by falling oil prices since mid-2014.

According to the bank's statement, the kwanza has new price corridor, as the previous range effective since April 2016 (AOA166 = $1) is no longer workable in the current environment. At the same time, the new corridor details are yet to be unveiled.

Angola is the second largest oil producer in Africa.

The country faced heavy economic downturn due to plunging oil, as this product generates 2/3 of overall state income and 95% of the currency revenue. The government had to take loans from the International Monetary Fund, Wolrd Bank, and China.  

Angola's international reserves slumped from $20 million in early 2017 to some $14 billion by early 2018.

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