Angola Adds Chinese Yuan to List of Approved Reserve Currencies

Angola's central bank has officially added the Chinese yuan to the list of currencies that local commercial banks can use to meet their mandatory foreign-currency reserve requirements. The decision highlights the deepening financial and trade relationship between the oil-exporting African nation and China.

Details of the Directive

The Bank of Angola announced the policy change in a directive dated July 2, which it published on its website this week. The yuan now joins the U.S. dollar, the euro, and the South African rand as an approved currency for these reserves.

Mandatory reserves are a portion of deposits that commercial banks are required to hold with the central bank. These funds are a key tool for managing liquidity in the banking system and ensuring overall financial stability.

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Economic Context and Implications

This move reflects the significant economic ties between the two countries. China is a primary trading partner for Angola and a major source of financing for its infrastructure projects. In turn, Angola is a key supplier of crude oil to China and has received billions of dollars in Chinese loans.

The inclusion of the yuan is part of a broader trend of its growing importance in international trade and finance, particularly in Africa, where China is the continent's largest trading partner. While the U.S. dollar remains the world's dominant reserve currency, this step by Angola signifies a gradual but noteworthy shift in the global financial landscape.