Angola’s currency fell to a record low after the central bank devalued the kwanza as the drop in oil prices cut the main source of government revenue and export earnings.
The currency weakened 5.3 percent to 132.6080 per dollar by 12:50 p.m. in Luanda, the capital, extending losses this year to 22 percent. The official selling rate for the kwanza was reduced to 130.442, according to prices quoted on the Banco Nacional de Angola’s website.
“We should probably expect more of this every two months or so,” Charlie Hampshire, the head of trading at London-based frontier-market specialist INTL FCStone Inc., said. “They’re not going in full pelt, purely because if there is a rebound in oil prices they don’t want to sell themselves short. Effectively, if we continue with this trend, further devaluation will be necessary. It can’t be enough.”
The reduction in the value of the kwanza’s exchange rate follows a devaluation in June to 116.8745 per dollar, from a previous official rate of 110.518. Angola, Africa’s second-largest oil producer, is struggling to cope with crude prices that have slid more than 25 percent since this year’s peak.