October 19, 2016 / 4:30 PM / 9 months ago

Congo central bank acts over falling currency and rising inflation

2 Min Read

KINSHASA, Oct 19 (Reuters) - Democratic Republic of Congo's central bank said on Wednesday it has increased the percentage of deposits banks must keep with it and plans to intervene in foreign exchange markets to prop up the franc currency and contain accelerating inflation.

The mining and oil sectors account for some 95 percent of export revenues in Africa's top copper producer and declining production has heaped pressure on the franc.

As a result, the government now forecasts inflation, which was less than 1 percent last year, to run close to 5 percent this year.

In a statement, the central bank said it had raised mandatory reserve requirements for domestic banks from 10 to 13 percent for short-term deposits and from 9 to 12 percent for long-term deposits.

It said the central bank would sell foreign currency on the market to further support the franc "if the economic fundamentals require it".

The bank has intervened repeatedly this year to support the franc, which has depreciated by more than 27 percent against the U.S. dollar on the parallel market to around 1,191 per dollar. Its official exchange rate was 1,086 per dollar last Friday.

The slumping economy comes amid political tensions over a delayed presidential election and the extension of President Joseph Kabila's term in office until elections in April 2018.

Prime Minister Augustin Matata Ponyo, credited with overseeing macroeconomic stability since 2012, is set to be replaced in the coming weeks by an opposition leader as part of a multi-party accord struck this week. (Reporting By Amedee Mwarabu Kiboko; Writing by Aaron Ross; Editing by Matthew Mpoke Bigg and Catherine Evans)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below