(Bloomberg) -- Angola’s kwanza fell to its lowest level in 25 years against the dollar as weaker oil prices and debt payments limit the crude producer’s ability to defend its currency.
The kwanza fell to 939.24, the lowest level since 1999 when it was embroiled in a civil war, extending Africa’s second-worst performing currency’s losses this month to 1.2% against the dollar. It has shed about 11% of its value since the start of the year.
Angola relies on oil for most of its export income and spends almost all of its revenue on servicing its debt. Interest costs ballooned after it resumed payments to China, its biggest creditor, in 2023 following a three-year moratorium.
“Recent pressure on oil prices does not favor the currencies of oil-producing countries like Angola,” said Tiago Dionisio, chief economist at Lisbon-based Eaglestone Advisory SA. A strong dollar is expected to continue to “put pressure” on currencies of African nations with foreign debt, he said.
Africa’s largest oil producer, Nigeria’s currency has also come under pressure.
Angola’s Finance Ministry last month said that it will pay local suppliers with Treasury bills because it doesn’t have sufficient cash. It has also delayed salaries of government workers at least once this year.
Angola, Africa’s third-largest oil producer, owes Chinese creditors about $17 billion. The nation must pay $1.1 billion monthly for domestic and foreign debt until December, Luanda-based newspaper Expansao reported Aug. 12.
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