Angola Central Bank Devalues Currency As Oil Slide Hits Revenue | Independent Newspapers Limited
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Angola Central Bank Devalues Currency As Oil Slide Hits Revenue

Posted: Jun 5, 2015 at 2:02 pm   /   by   /   comments (0)

ANGOLA’S Central Bank has devalued its currency as the drop in oil prices cut the main source of government revenue and export earnings.

The rate for the kwanza was weakened to 116.8745 per dollar on Friday, compared with 110.518 on Thursday, June 4, 2015, according to prices on Luanda-based Banco Nacional de Angola’s website.

The currency dropped 6.6 per cent, the most since October 2009, to 117.7085 per dollar on the interbank market as of 1.11 p.m. in the capital, a record low.

“It is rare to have such a drastic move in the kwanza,” Charlie Hampshire, the London-based head of trading at INTL FCStone Inc., which specialises in frontier market currencies, said by e-mail. “A move of this nature has not occurred since 2009.”

Angola, Africa’s second-largest oil producer, is struggling to cope with crude prices that have slid more than 40 percent over the past year.

The government in February cut its 2015 budget by 26 percent to 5.4 trillion kwanza ($46 billion), while predicting the fiscal gap will reach seven per cent of gross domestic product.

The south west African country plans to borrow $25 billion this year to plug the shortfall, according to a Finance Ministry proposal obtained by Bloomberg News.

“They’ve allowed for continual depreciation in recent months, but this move is stronger,” Samir Gadio, the head of African strategy for Standard Chartered Plc in London, said by phone.

“There’s a massive black market premium and the exchange rate was not in line with fundamentals. It’s still misaligned. The balance of probabilities is still to the upside.”