Monday, April 30, 2018

Angola holds rate as inflation eases, FX reserves rise

     Angola's central bank left its basic interest rate (BNA) at 18.0 percent and said it had sold 735.94 million euros to commercial banks in March, pushing up total sales this year to 2.246 billion from 1.510 billion in February.
     After years of foreign currency shortage, the National Bank of Angola (BNA) in January switched to a floating exchange rate regime with bands from a fixed exchange rate system, and began auctions of foreign currency to determine a reference rate.
      The BNA's monetary policy committee said the difference between the exchange rate of the kwanza against the euro between Jan. 9, when a new foreign currency regime was adopted, and March 30 had narrowed to 83.72 percent from 101.19 percent.
      The combined impact of higher oil exports and prices helped the trade balance rise to US$2.67 billion in March, up from $2.01 billion in February, and pushed up the level of international reserves by 1.26 percent to $17.69 billion from February, the equivalent of 7.37 months of imports.
      The adoption of a new exchange rate regime in January led to an immediate plunge in the value of the kwanza, which has continued to depreciate since then. Today the kwanza was trading at 273 to the euro, down just over 27 percent since Jan. 8, the day before the switch in exchange rate regime.
      Against the U.S. dollar the kwanza was trading at 225.9, down 26.5 percent since Jan. 8.
      Angola's inflation rate has been declining steadily since hitting 41.12 percent in December 2016 and fell to 20.9 percent in March from 21.47 percent in February.
       The country's monetary base, which is now a monetary policy variable, grew by 4.56 percent in March for an annual increase of 15.09 percent. Credit issued in kwanza, especially to the production and distribution of electricity, gas, water and education, rose 0.33 percent in March for an annual rise of around 9.50 percent, BNA said.

        The National Bank of Angola issued the following statement:

"The Monetary Policy Committee of the National Bank of Angola (CPM) met today, on April 30, 2018, and decided to maintain the basic interest rate (BNA Rate), and interest rates on the Permanent Lending and Liquidity Absorption Facilities in 18%, 20% and 0%, respectively. The CPM also decided to keep the reserve ratio coefficients in national and foreign currency unchanged at 21% and 15%, respectively. 

The indicators related to the national economy were also analyzed, highlighting the evolution of the inflation rate and the factors that determine its behavior in the short term. 

The IPCN (National Consumer Price Index), which includes all provinces, registered a monthly variation of 1.44% (+0.18 pp), higher than in the previous month and a year-on-year change of 20.90% in last 12 months (-0.57 pp). The provinces with the highest monthly variations were: Cuanza Sul (2.30%), Lunda-Norte (2.18%) and Cunene (2.13%). Benguela provinces (1.33%), Huíla (1.37%) and Luanda (1.38%) registered the lowest variations. With regard to the general panorama of the IPCN by classes, it was verified that the highest monthly price variation was observed in the Miscellaneous Goods and Services category (3.20%). 

The Monetary Base in National Currency, the monetary policy operational variable, expanded by 4.56% in March 2018 in monthly terms and 15.09% in year-on-year terms compared to March 2017. 

In the interbank money market, in March 2018, there was a reduction of 16.67% in the amounts traded, totaling a flow of KZ 758.57 billion. LUIBOR, at overnight maturity, stood at 20.12%, which represents an increase compared to its level at the beginning of the year (17.77%).

The monetary aggregate M2, which brings together all bank deposits in national currency and the notes and coins held by the public, varied positively during the month of March at Kz 21.23 billion. From Kz 4.45 billion in February to Kz 4.47 billion in March 2018, which corresponds to an increase of 0.48%. In the last 12 months, this indicator varied by 4.04%.

In the credit market, there was a monthly increase of 0.33% in National Currency Credit, especially the increase in credit granted to the Production and Distribution of Electricity, Gas and Water and Education In the last 12 months, credit to the national currency economy grew at around 9.50%.

In the period under review, the National Bank of Angola sold a total of Euro 735.94 million to commercial banks, and the accumulated sale in the current year was Euros 2,245.80 million.

The combined effect of the increased quantities of oil exported and the price of Angolan branches resulted in a balance of the goods account of USD 2.67 billion in March, higher than in February (USD 2.01 billion ). 

Gross International Reserves (IBR) in March 2018 stood at USD 17.69 billion against USD 17.47 billion in February 2018, representing a positive variation of 1.26%. At the end of the month under review, the level of International Reserves represented 7.37 months of coverage of imports of goods and services.

Since the entry into force of the new exchange rate regime, on 9 January, until 30 March, the exchange rate differential of the national currency against the Euro in the secondary and informal markets declined by 17.48 pp from 101.19% to 83.72%.

The next meeting of the Monetary Policy Committee of the National Bank of Angola will be held on May   28, 2018."


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