"Last week, the kwanza depreciated 3.6 percent against the dollar and 3.9 percent against the euro; after having registered consecutive daily drops from May, between Wednesday and Friday [last week] the Angolan currency appreciated by 0.51 percent against the euro, rising from 903.8 kwanzas per euro to 899.2 kwanzas per euro", reads the weekly analysis by the economic studies office of Banco Fomento Angola (BFA) on the progress of the main Angolan economic indicators.
"As for the dollar, the movement of daily breaks continued, but at a much slower pace compared to the previous ones, going from 822.4 kwanzas per dollar to 822.9 kwanzas per dollar", add the analysts.
Since the beginning of the year, "the Angolan currency has depreciated by 38.8 percent against the dollar and 40.2 percent against the European Union currency", reads the BFA note.
The President, João Lourenço, has already defended that the central bank should implement measures to strengthen the kwanza, in addition to helping the economy to diversify and control inflation.
Inflation in Angola rose to 10.62 percent in May, ending 15 months of decline after the government cut fuel subsidies.
The new governor of the National Bank of Angola has already revised the inflation forecast for this year upwards, now anticipating an increase in prices between 9 and 11 percent at the end of 2023.
This month, the financial rating agency Fitch Ratings downgraded the outlook for the economy from Positive to Stable, maintaining the rating at B-.
"The revision of the 'outlook' of Angola from Positive to Stable reflects the forecasts of lower economic growth, higher inflation and an increase in the ratio of debt to Gross Domestic Product (GDP) as a result of the strong depreciation of the kwanza", reads in the note that also explains the decision to maintain the rating at B-.
Fitch Ratings reduced the growth forecast to 1.5 percent of GDP this year, 2 percent next year, compared to the 3.1 percent recorded in 2022, also estimating that inflation will rise from 14.7 percent, at the end of this year, to 17.1 percent in 2024, when until now it was expected that next year prices would grow to just single digits.
In the note, analysts also estimate that the kwanza, which lost 30 percent of its value against the dollar in the first half, will reach the end of the year worth 760 kwanzas per dollar, compared to 504 kwanzas per dollar at the end of 2022, "but a greater depreciation is possible if the internal supply remains limited", they warn.
