An­gola asks cit­i­zens to curb for­eign-cur­rency use

The Pak Banker - - BUSINESS -

An­gola's cen­tral bank asked com­pa­nies and cit­i­zens to cut for­eign-ex­change use by 50 per­cent amid a dol­lar short­age caused by dwin­dling rev­enue from oil and diamond ex­ports.

Africa's sec­ond- big­gest oil pro­ducer "won't have more for­eign ex­change avail­able soon," the state- run broad­caster Tele­visao Publica de An­gola re­ported on Mon­day, cit­ing cen­tral bank Gover­nor Jose Pe­dro de Morais Ju­nior. A spokesman for the cen­tral bank didn't im­me­di­ately re­spond to Bloomberg's re­quest for com­ment.

The kwanza has lost 19 per­cent against the U. S. dol­lar this year even as the Banco Na­cional de An­gola ra­tioned for­eign-ex­change sup­plies via weekly auc­tions, re­sult­ing in an or­der back­log of as much as $6.5 bil­lion, ac­cord­ing to Stan­dard Bank Group Ltd. Stan­dard & Poor's cut the south­ern African na­tion's credit-rat­ing out­look to neg­a­tive on Aug. 14, pre­dict­ing the fis­cal deficit will widen in the face of lower oil prices.

"De­pressed oil prices and slow progress on boost­ing diamond ex­ports is un­der­min­ing for­eign-cur­rency sup­ply," Sa­man­tha Singh, a Johannesburg- based an­a­lyst at Stan­dard Bank, said in a re­port on Aug. 13. "It seems that the sit­u­a­tion has, in fact, de­te­ri­o­rated over the past month. We ex­pect fur­ther" kwanza weak­ness, she said.

The cen­tral bank has raised its bench­mark in­ter­est rate three times since March to con­tain soar­ing prices. The rate was in­creased to 10.25 per­cent on July 27, one month af­ter it raised the cash re­serve ra­tio for banks to 25 per­cent. The na­tion's for­eign-ex­change re­serves fell by 21 per­cent in the past year to $24.2 bil­lion, ac­cord­ing to data com­piled by Bloomberg.

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