January 3, 2018 / 5:59 PM / 2 years ago

UPDATE 1-Angola to abandon currency peg against dollar, central bank head says

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LUANDA, Jan 3 (Reuters) - Angola plans to abandon its currency peg against the U.S dollar, its central bank governor said on Wednesday, setting the stage for the kwanza to fall sharply to match its value on the streets.

Angola has maintained a quasi-pegged exchange rate against the dollar of about 166 kwanza per dollar, even though the dollar buys about 400 kwanza on a thriving black market.

“We will stop having a fixed foreign exchange,” José de Massano Junior, the governor of the central bank, told a news conference. “We will adopt a floating regime of foreign exchange.” The changes will be implemented from this month, the governor said.

The central bank has been trying to defend the currency peg using foreign exchange reserves, but the country is running out. Its reserves have more than halved since 2013 to about $14 billion.

Angola relies on oil for almost 90 percent of its income, but the collapse in the price of crude that began 2014 has hit the economy and foreign currency inflows. (Reporting by Herculano Coroado, writing by Tiisetso Motsoeneng, editing by Larry King)

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