14 June 2019
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AllAfrica InfoWire (Washington, DC)

Angola's Kwanza - Devaluation, depreciation, decline, and poverty

Angola's currency, the Kwanza, appreciated slightly against the Euro today, but has remained at historical lows for four days against the Dollar.

According to data from the National Bank of Angola (BNA), trading today was at 384,602 Kwanzas / Euro and 340,687 Kwanzas / Dollar.

According to the Angolan Central Bank, the Kwanza reached its lowest level ever against the Euro, at 385,044 Kwanzas / Euro, the same day as it maintained its exchange rate with the Dollar.

Since 9 January 2018, Luanda has put an end to the fixed exchange rate, which had already undergone changes, and started to sell currencies to commercial banks at an auction. The auctions are now daily, rather than three-day events as it was at the start. The Kwanza has already depreciated 51.794% against the Euro and 51.298% against the Dollar.

In January 2018, one Euro was worth 185.4 Kwanzas, while one Dollar was trading at 165.92 Kwanzas. In January this year, one Euro was worth to 352,828 Kwanzas, while one Dollar was trading at 310,158 Kwanzas.

In the grey market today, the Euro trades between 520 and 540 Kwanzas, and the Dollar between 440 and 460 Kwanzas.

Some economic indicators

From January 2018 to June 2019, the Angolan currency lost 105% of its purchasing capacity against the Dollar and 107.7% against the Euro. On that date, 100 Dollars were equivalent to 16,592 Kwanzas and 100 Euros to 18,540 Kwanzas.

The price of a barrel of oil sold by OPEC increased by 22.17%, from 52.51 dollars in 2017, to an average of 64.15 dollars over the first five months of 2019.

The Net International Reserves, despite a loss of purchasing power of more than 100% taking into account the price of the currency, suffered a reduction of 40% from 2017 to June 2019. If the IMF injection is removed in that same year, the balance is 47%.

The oil decline can also be verified by other calculations. Accounting for secondary sources, in the first five months of 2017, Angola produced an average of 1,633 mbpd, in 2018 the amount was 1,544 mbpd, and in 2019, 1,439 mbpd. This is a 12% reduction from 2017 to May 2019.

The informal activity in the supply of foreign currency, products, and services is still winning the daily battle against the formal market, even when taking into account availability, quantity, speed, and stability.

Sources:

  • Lusa
  • Citadel
  • Cid. Intelligence Unit, Monetary Policy Report - An Alternative Model (restricted edition).
  • Cid. Intelligence Unit, Report on the Economy and Management of the Angolan Oil Sector (restricted edition).

Original article:

https://cidadela.online/2019/06/14/kwanza-desvalorizacao-depreciacao-declinio-petrolifero-e-pobreza-real/

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