Kwanza: Still Under Pressure, But Peg To Hold

The downside pressure on the Angolan kwanza has receded, and we now believe that the current level of AOA77.40/US$ will hold over the remainder of 2009. Oil revenues are rising and foreign reserves appear to have bottomed out - which both bode well for the Banco Nacional de Angola's ability to sustain the currency peg. That said, as shown on the chart, the kwanza has been trading in a wider band than that seen over 2007-2008, and we expect this to continue over the coming months.

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