Angola seeks to stem currency decline

Angola's central bank tightened currency liquidity at an emergency meeting.

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Luanda - Angola's central bank tightened currency liquidity at an emergency meeting, the regulator said on Thursday, after the currency in Africa's second largest oil exporter weakened a further 6 percent this week.

The central bank raised its standing lending facility, the rate it charges to lend to primary dealers, to 12.5 percent from 12 percent and the standing facility liquidity absorption rate to 1.75 percent from zero, it said in a statement.

These tightening measures are often used to increase foreign exchange reserves, traders said.

“This is definitely a tightening of monetary policy,” said Anthony Lopes Pinto, Managing Director Imara Securities Angola.

The benchmark interest rate was left unchanged at 10.5 percent.

Angola's kwanza has shed nearly 30 percent against the dollar this year as sub-Saharan Africa's third largest economy was hammered by a steep fall in oil prices.

The kwanza was trading at 135.96 per dollar, according to the Bank of Angola website, but the black market rate is much lower.

Angola devalued the kwanza on Monday to 135.4 to the dollar, having already made a similar move in the previous week following a dollar auction where it accepted a rate of 149.9 per dollar.

“They will continue to devalue the kwanza until there is some stability. The fact is there is a lot of liquidity in the market that is fuelling the demand the for dollars,” Lopes said.

REUTERS