The oil boom has added fuel to a rally for Angola’s kwanza that’s made it the world’s best-performing currency against the dollar.
The currency of Africa’s second-biggest crude producer has strengthened 20% this year, buoyed by surging oil prices, several credit-rating upgrades and the likelihood the central bank will continue to raise interest rates.
The worst-performing currency is the Russian ruble, down 37% this year amid sanctions against Russia after its invasion of Ukraine.
Brent crude almost doubled in the past year to as high as $139 a barrel earlier this month. Brent futures fell below $100 on Tuesday, still up 28% since the beginning of January.
Angola’s economy, which depends on oil for 90% of export revenue, is forecast to expand 2.9% this year after exiting five years of recession in 2021. The central bank may increase rates this month to rein in rising consumer prices, S&P Global ratings credit analyst Zahabia Gupta said on Feb. 18.
In July, Angola’s central bank increased its benchmark interest rate to a record 20% from 15.5% to curb inflation. The kwanza is also recovering from a sharp drop in 2019 after the central bank started allowing the currency to trade more freely against the dollar.
S&P increased the country’s credit rating on Feb. 4, while Fitch Ratings upgraded the southern African nation’s debt last month. In September, Moodys Investors Service raised Angola’s credit rating for the first time, citing improved governance and debt metrics.
The rating upgrades took place after Angola last year completed its $4.5-billion program with the IMF, in which it allowed the kwanza to trade freely against the dollar.
Angola is an AfCFTA member country