Three-month-long currency reserve fall in Angola

Deposits of foreign currency in Angolan commercial banks has dropped by 2% again in July, according to the National Bank of Angola (BNA), which accounts for its third consecutive fall.

According to preliminary data from the BNA about the monetary policy of the country, compiled by the Portuguese news agency Lusa, these mandatory reserves went down in July to the value of 3.408 bn kwanzas  (€1.083m).

This represents a fall of about 1.8% in comparison to June, a month which had accounted for a 3% drop already, in comparison to May.

The data showed that around 30 banks operating in Angola were forced to keep mandatory currency reserves for their sight deposits at the BNA, which established a 15% interest rate on foreign currency and a 30% interest rate for the national currency.

In May this year, the Angolan central bank reduced the coefficient for the mandatory foreign exchange currency from 21% to 19%.

The value of deposits of foreign and national currency was updated in April, and it reached 1.170 billion kwanzas (€3.716m), the highest value the Angolan central bank had ever made available.

With a total of €5.850 million or 1.090 billion kwanzas, December 2017 registered a lower value in kwanzas but a higher value in foreign currency, due to the applicable exchange rate of that month. Since the beginning of the year, the kwanza has depreciated about 40%.

The banking system, by the end of July, should have around 292 billion kwanzas (€938m) in compulsory foreign currency reserve, and around 792 billion kwanzas (€2.453m).

Angola is living a very complex financial and economic crisis, the result of a fall in crude prices on international markets. The issue is echoing on the country’s foreign exchange market, making imports harder to complete and damaging the optimal foreign currency’s management which has been lately subject to many restrictions.