The National Reserve Bank (BNA) has decided to adopt the floating exchange rate, because with the fixed regime used until 09 January this year, even with a high inflation rate (27%), the Angolan Kwanza (AKZ) had a stable value, a fact that makes the Kwanza the fourth most overrated currency in the world.
In terms of overvalue, the Kwanza only loses to the currencies of Venezuela, Syria and Yemen, according to the clarification made last Thursday, in the National Assembly, by the governor of the BNA, José de Lima Massano.
The BNA governor was speaking at the session that discussed and approved, in general terms, the 2018 State’s General Budget (OGE).
José de Lima Massano reminded that while there was a fixed exchange rate regime there was no reduction of prices, on the contrary, there was a steep fall in the international net reserves of the country.
“In the end of last year we recorded the fall in reserves in the order of 33 percent and if the circumstances persist and if we assume that at the level of revenues we can have a behaviour similar to the one observed in 2017 and if the expenses in foreign currency continue in the same pace, we run the risk of seeing in the end of this year a drop in our reserves of about 50 percent”, the BNA governor explained, justifying the reason why it was adopted thwe floating exchange rate regime.
The change of the exchange rate system happens in the ambit of the monetary and exchange adjustment measures, being implemented in the ambit of the Macroeconomic Stabilisation programme (PEM) for 2018, aimed at making the Angolan economy more competitive.
Following the adoption of the floating exchange rate, the Kwanza has already devalued itself by 25 percent in relation to the Euro and 18 percent in relation to the US Dollar.
According to the latest exchange rate one Euro is being traded at 248.77 kwanzas, while one US Dollar is being traded at 203. 61 kwanzas.
In the fixed regime, one Euro cost 188 Euros and one US Dollar 166 kwanzas.