Consultancy firm NKC African Economics (NKC) considers that the 2.4% appreciation of the kwanza in the first half will be canceled by the end of this year, with the kwanza losing around 11%, setlling into 645 per dollar.
“We anticipate that the exchange rate of the kwanza against the dollar will, by the end of the year, cancel out some recent gains, to reach an average of 645.4 kwanzas per dollar in 2021, which compares with an average of 578.3 kwanzas per dollar in 2020”, the firm’s analysts write in a report on the evolution of the Angolan currency.
NKC, an African subsidiary of British Oxford Economics, points out that “the risk of a strong depreciation in the currency remains high due to the uncertainty in the energy market caused by the covid- 19 pandemic”.
Furthermore, they add, “despite the recovery in risk assessment, which has alleviated short-term risks, the kwanza will likely remain under pressure in the near term due to the country’s heavy dependence on the oil sector, which is facing a decline in production due to issues operational and lack of investment”.
The Angolan currency appreciated 2.4% from the beginning of the year to June 10, improving the exchange rate to 642 kwanzas per dollar, in a period in which the price of oil increased by almost 46%, to 72.4 dollars per barrel due to strong Asian demand, increasing the flow of dollars to Angola.
“This, together with the flow of reserves from the disbursement of the International Monetary Fund (IMF) during this period, supported the strengthening of the kwanza, which devalued by 27% over the past year.”