Bank of Angola Adds Chinese Yuan to Approved List for Bank Reserves

Angola's central bank has officially added the Chinese yuan to the list of currencies that local commercial banks can hold to meet their mandatory reserve requirements. The move signals the growing economic importance of China to the southern African nation.

The Central Bank's Directive

The Bank of Angola announced the policy change in a directive dated July 2, which was published on its website Thursday. The yuan now joins the U.S. dollar, euro, and South African rand as approved currencies for this purpose.

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

Deepening Sino-Angolan Ties

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The decision reflects the strong and expanding trade and financial relationship between the two countries. China has become a primary trading partner for Angola and a major financier of its infrastructure projects.

Angola, a major crude oil producer, is a significant supplier to China and has received billions of dollars in Chinese loans. This policy change facilitates the increasing flow of capital and trade denominated in the Chinese currency.

Broader Context

The yuan's inclusion is part of a broader trend of its growing influence across Africa, where China stands as the continent's largest trading partner. While this move elevates the yuan's status in Angola's financial system, the U.S. dollar remains the world's dominant currency for international trade and central bank reserves.