Angola to replace Kwanza to Dollar currency peg with exchange rate band

Angola’s central bank have announced plans to ditch the pegging of the Kwanza with the US dollar.  At the close of 2017 the formal exchange rate of Kwanza to US Dollar was pegged at 166:1, however the parallel market rate was nearly triple this this at 495:1. The central bank cited worsening shortages of foreign currency reserves and the imbalance between supply and demand amongst the reasons for the change in policy. Foreign currency reserves have rapidly depleted in recent years, hit hard by the crash in oil prices in 2014 which provided a key source of foreign currency.  Reserves are thought to have halved since 2013 to approximately $14 billion. The currency peg is to be replaced by a trading band which will maintain the value of the Kwanza within a set range. The parameters of the trading band were yet to be announced at the time of printing.

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Robyn K