Angola's Central Bank Orders Banks to Boost Foreign Exchange Liquidity
TLDR
- Angola's central bank mandates commercial lenders to release 30% of foreign exchange from oil and diamond companies to boost market liquidity.
- Directive aims to improve access to foreign currency for businesses and individuals in Angola, aligning with actions taken by other African nations.
- Intended to enhance foreign exchange market dynamics and address kwanza depreciation, making it one of Africa's top underperforming currencies.
Angola’s central bank has directed commercial lenders to release 30% of the foreign exchange they acquire from oil and diamond companies onto the interbank market to improve liquidity.
The move, announced in a directive dated September 13, aims to increase access to foreign currency for businesses and individuals in Angola, following similar steps by other African nations like Zimbabwe and Nigeria. Under the directive, banks must either trade the currency on the interbank market or sell it directly to the Banco Nacional de Angola if the market is unavailable.
The directive is intended to enhance the dynamism of the foreign exchange market amid the continued depreciation of the kwanza, which has fallen 2.2% against the dollar this month, making it one of Africa’s worst-performing currencies this year.
Key Takeaways
Angola’s move to boost foreign exchange liquidity by mandating banks to trade a portion of their foreign currency acquisitions is aimed at stabilizing the kwanza. However, without further intervention from the central bank, the impact on the exchange rate may be limited as the currency continues to weaken due to external pressures like falling oil prices and debt payments.
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