Kwanza, Inflation and Foreign Exchange in Angola

Inflation is back in single digits for the first time in eleven years. The question is how much of that is durable.

In July 2026, Angolan annual inflation fell to 9,33%. It was the first single-digit reading since May 2015 — 134 months earlier — and the end of a run that had peaked above 31% just two years before.

The kwanza, meanwhile, has barely moved. It has traded around 912 to the dollar since December 2024, a stretch of nominal stability without precedent in recent Angolan history.

This is a genuine achievement and it has real consequences for anyone holding, lending or earning kwanza. It also rests on foundations worth examining carefully, because two of the main pillars are administrative rather than structural.

At a glance

• Inflation: 9,33% in July 2026, down from a peak of 31,09% in July 2024
• Policy rate: 15,75%, cut by 125 basis points in July 2026
• Exchange rate: around 912 Kz/USD, stable since December 2024
• Parallel market gap: roughly 30%
• International reserves: about USD 14,9 billion in June 2026
• BNA year-end inflation forecast: 8,6%, revised down from 11,5%

Monetary policy

The BNA tightened hard into the 2024 shock, raising the policy rate — the Taxa BNA — to a peak of 19,50%, with the liquidity provision facility at 20,50% and the absorption facility at 18,50%.

Easing began once disinflation was established:

• January 2026 — cut 100 basis points to 17,50%
• March 2026 — held at 17,50%, with the local currency reserve requirement cut from 18,00% to 17,50%
• May 2026 — cut 50 basis points to 17,00%
• July 2026 — cut 125 basis points to 15,75%, with the liquidity facility at 16,75% and absorption at 14,75%

The July decision, taken at the 130th Monetary Policy Committee meeting in Malanje, came with a sharp downward revision of the year-end inflation forecast, from 11,5% in May to 8,6% with a margin of one percentage point either way. GDP growth was revised up to 3,6%.

Reserve requirements moved alongside rates. The BNA raised the local currency requirement to 21,00% during the 2024 tightening to absorb interbank liquidity, then reduced it in stages to 17,50% by March 2026. The foreign currency requirement remains at 100%, held in unremunerated deposits at the central bank. In the second half of 2026 the BNA added the Chinese renminbi as an eligible currency for meeting foreign currency reserve requirements — a small but deliberate step away from exclusive dollar dependence.

The committee meets roughly every two months.

The kwanza: how the regime changed

Angola's exchange rate policy has passed through three phases.

Before 2018 the kwanza was effectively pegged, with the BNA defending an administrative rate by drawing on reserves. The result was a persistent gap between the official rate and what the currency was actually worth.

In January 2018 the BNA moved to a managed float with bands, unpegging from the dollar. The adjustment was severe — the currency lost more than 80% of its value as the distortion unwound.

From 2020 the kwanza floated with real volatility tied to oil cycles. It appreciated through 2021 and 2022, reaching around 503 Kz/USD, before a 39,23% depreciation in 2023 as oil receipts fell and external debt service tightened.

Depreciation slowed to 9,12% in 2024. Since December 2024 the rate has been essentially flat: through 2026 it has traded between about 912,58 and 916 kwanza per dollar, and at the time of writing sits around 912,80 — a movement of less than a tenth of a percent since the start of the year.

Against the euro the picture is more volatile, since that rate reflects dollar-euro movements as much as anything domestic. The kwanza has traded roughly between 1.041 and 1.080 per euro during 2026.

The parallel market

Despite formal-market stability, a parallel exchange market persists at a premium of roughly 30% to 33% over the official rate.

The gap exists because demand for foreign currency exceeds what the formal system allocates. Informal traders — who import consumer goods at scale and often sit outside the banking system — cannot readily access formal FX, and rigidities in how banks allocate currency leave some formal demand unmet too.

For a business operating in Angola, this is the practical reality behind the headline rate: the official number tells you what a transaction settles at, not necessarily what it costs to obtain currency in size.

How foreign exchange actually trades

Angola no longer runs traditional central bank currency auctions.

In May 2020 the BNA moved trading onto Bloomberg FXGO, an electronic platform supporting request-for-quote and single-tenor auction trading between authorised participants. The stated aim was price transparency — letting the rate emerge from actual transactions rather than administrative decision.

Who participates. Commercial banks are on one side. On the other are the country's foreign currency earners: oil and gas producers and diamond exporters, which sell dollars into the market. Under Instrutivos n.º 23/2021 and n.º 01/2022, large taxpaying importers, international airlines and insurance companies were authorised to trade directly on the platform for transactions above USD 50.000, rather than going through a bank intermediary.

The BNA's role is now that of a participant rather than an auctioneer. It intervenes to smooth volatility or adjust reserves rather than setting a scheduled allocation.

In 2025, total foreign currency supply to the primary market reached about USD 12 billion. Sales by oil, gas and corporate sellers to banks rose 23% to roughly USD 9,69 billion. The National Treasury sold about USD 1,82 billion, and the BNA injected a further USD 489 million in targeted spot sales to meet seasonal demand spikes, such as airline remittances and private transfers.

International reserves

Gross international reserves stood at approximately USD 14,9 billion in June 2026, covering around 6,2 months of imports of goods and services on the BNA's reporting. That is down from 2024, when reserves were near USD 15,8 billion and import cover was longer.

The BNA has attributed the decline to both lower reserve levels and higher import and external service payments. The buffer remains comfortable by international benchmarks — three months of import cover is the conventional adequacy threshold — but the direction is worth tracking, particularly given that reserves are what make the managed exchange rate sustainable.

De-dollarisation

Angola has historically been a heavily dollarised financial system, with a large share of deposits and credit denominated in or indexed to foreign currency. That weakens monetary policy: when much of the money in the system is not the currency you control, changing your policy rate does less.

This has been shifting. Financial dollarisation fell from a peak of around 55,78% in 2020 to somewhere in the range of 37% to 42% by 2024–2025.

Two things are driving it. The BNA has pushed local currency credit expansion, which grew 22,55% in 2025 to about 7,37 trillion kwanza. And the kwanza's integration into the SADC regional real-time gross settlement system allows some cross-border trade within southern Africa to settle in national currency rather than requiring dollars at all.

What to watch

Fuel subsidy reform. It is the largest single threat to the inflation trajectory, and the fiscal arithmetic makes it a question of when rather than whether.

Whether the managed rate holds. Stability has been bought with reserves and administration. Falling oil receipts would test it.

The parallel gap. A narrowing spread would signal that formal FX supply is genuinely meeting demand. A widening one signals the opposite, whatever the official rate says.

The easing cycle. With inflation below the policy rate by a wide margin, real rates are high and there is room to cut further. The pace will depend on whether disinflation continues once the base effects fade.