Angola Faces Currency Test

Angolan President Joao Lourenco was elected five months ago promising an “economic miracle”. But the path to transforming the oil-dependent country’s economy will be long and difficult—as was highlighted by anger over the de facto de-valuation of the local currency, AFP reported. Since January, new central bank governor Jose de Lima Massano has been presiding over something of a fiscal revolution, weaning the local kwanza currency off its artificial peg to the dollar, and phasing in a floating exchange rate. The local unit has been fixed at a rate of 166 to the dollar since 2016, even if the kwanza has changed hands at a rate of more than 400 for a dollar on the black market. “We have an exchange rate that doesn’t reflect reality,” Massano conceded. Before the currency is allowed to float completely freely by the end of 2018, the kwanza is now trading between two rates that authorities are for now keeping secret to avoid speculation. The central bank chief justified the move by pointing to the urgent need to stem the “continuing decline of currency reserves”.