Angola says no devaluation in sight

The Central Bank of Angola is not planning to devalue the kwanza and will resist speculative attempts to weaken the national currency, said Ricardo Viegas de Abreu, a deputy governor of the central bank on Tuesday.

Angola is Africa's second biggest oil producer and relies on oil for 90% of its revenues and was affected by the global plunge in oil prices. The decline in oil revenue had sparked a kwanza sell-off on fears of devaluation. However, Abreu moved to soothe investor concern saying the central bank had "no plans to devalue the national currency."

"We all know there was a sharp drop in our revenues and our foreign exchange reserves but we have the conditions to stabilise the currency at the current level," Abreu said, adding: "We shouldn't stop believing in the kwanza because of that. The kwanza is our traditional currency. [...] We are taking measures that will enable us to stabilise (the kwanza) and provide comfort for all the players in the market. We think we will have a more positive end to the year," he added

Due to the high demand for dollars the central bank had to devalue the kwanza by 4% in April to Kz78 to the greenback. However, the kwanza is now trading in the black market at about Kz92 per dollar as a result of a dollar shortage in the banking system. The central bank has opted to restrict the amount of dollars it supplies to commercial banks at its daily auctions and now only sells about 10% of the daily demand for dollars.

The Association of Angolan Banks urged the government in May to review its monetary policies, including limits on the sale of dollars, as it was hurting businesses that relied on dollars to pay for imported goods and services.

According to the central bank, foreign exchange reserves dipped by 30.5 % to $12.1 billion in June compared to $17.499 billion in December.