The BMI consultancy believes that the Angolan currency will continue to depreciate, reaching the end of the year worth around 1,000 kwanzas per dollar, a depreciation of almost 17% compared to the current exchange rate.
“Angola’s policy makers allowed the kwanza to depreciate 39.5% in June, and we think the currency will continue to depreciate for the rest of the year, falling another 16.8% from the midpoint of 830 kwanzas per dollar to 1,000 kwanzas per dollar”, the analysts write in a commentary on the kwanza’s evolution.
In the analysis, sent to clients, this consultant owned by the same owners of the financial rating agency Fitch Ratings predicts that next year the kwanza will stabilize around this exchange rate, with a slight rise in the world oil price and a lower rate of decline in oil production.
“Angola’s strong exposure to external volatility affecting the oil sector poses a risk of depreciating the kwanza even more than forecast”, they warn. For BMI, there are three factors that explain the devaluation of the kwanza in recent months: the end of the three-year moratorium on Chinese debt, which ended in the first half of this year and puts pressure on foreign currency reserves, the fall in oil revenues due to lower prices and production, and interest rate cuts between January and June, to 17%.
By 2024, they conclude, the kwanza should stabilize, ending at 1,010 kwanzas per dollar by the end of the year, mainly due to a slight rise in oil prices and a slower rate of decline in oil production.