Cbank says no plans to devalue Angola kwanza-paper
02.16.09, 05:42 AM EST
LUANDA, Feb 16 (Reuters) - Angola has no plans to devalue its currency, the head of the country's central bank was quoted as saying on Monday, despite a rush to buy dollars amid fears a global economic crisis may cause the kwanza to plunge.
Demand for dollars was more than five times higher than usual on Friday, according to the central bank, amid rumours the country was preparing to devalue the kwanza on the back of falling oil and diamond prices -- Angola's two main exports.
But Amadeu Mauricio, governor of the Banco Nacional de Angola (BNA), said in the state-owned Jornal de Angola newspaper that such rumours were unfounded.
He said the move would only increase the price of goods and services, undermining government efforts to tame inflation in an economy that is mostly dependent on imports after almost three decades of civil war.
'The recent measures taken by the government in reaction to the impact of the global financial crisis on the Angolan economy means that these rumours are unfounded.'
The kwanza is currently unofficially pegged at around 75 to the U.S. dollar.
A source close to the central bank, though, said there could be a slight devaluation of the kwanza but added that the country's foreign reserves, which at below $20 billion, would help Angola keep its currency stable and meet financing needs in the coming years.
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Some signs of financial distress have appeared in recent weeks. On Friday, demand for dollars rose to $335 million, up from a daily average of $50 to $60 million.
The source said the central bank governor was to meet with the heads of major commercial banks in Angola but that the meeting was 'normal'.
The rush to buy dollars came a day after President Jose Eduardo dos Santos called on his government to diversify the economy away from oil and diamonds, with prices having fallen in recent months.
He also urged all state-owned companies to cut back on spending as the government prepares to revise downwards its $42 billion spending plan for 2009.
Angola rivals Nigeria as sub-Saharan Africa's biggest oil producer and is the world's fifth biggest diamond producer. Oil accounts for around 90 percent of the country's revenues.
Angola's inflation increased to 13.18 percent in 2008, up from 11.78 percent the previous year, on the back of rising food prices. The government plans to bring inflation down to 10 percent this year. |
