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Bank of Angola Adds Chinese Yuan to Approved List of Reserve Currencies
Summary
Angola's central bank has included the Chinese yuan as an approved currency for local banks' mandatory reserves, a move that underscores the growing economic and financial relationship between the two nations.
The Bank of Angola has officially added the Chinese yuan to the list of currencies that commercial banks can use to fulfill their mandatory foreign-exchange reserve requirements, signaling a further strengthening of economic ties with China.
Central Bank Directive
According to a directive dated July 2 and published on the central bank's website, the yuan now joins the U.S. dollar, euro, and South African rand as approved currencies for these reserves.
Mandatory reserves are a portion of deposits that commercial banks are required to hold with the central bank. This policy tool is crucial for managing liquidity within the banking system and ensuring overall financial stability.
Deepening Sino-Angolan Ties
AdThe decision reflects the significant and expanding economic relationship between Angola and China. China has become Angola's most important trading partner and a primary source of financing for major infrastructure projects across the country.
This economic partnership is largely centered on natural resources. Angola is a significant supplier of crude oil to China and, in return, has received billions of dollars in Chinese loans to fund its development.
The Yuan's Expanding Influence
This policy change in Angola is part of a broader trend of the yuan's increasing importance across Africa, driven by China's status as the continent's largest trading partner. While the yuan's role is growing, the U.S. dollar remains the world's dominant currency for international trade and central bank reserves.