Angola allows Chinese yuan for mandatory foreign currency reserves

Angola has authorised its commercial banks to use the Chinese yuan to satisfy a portion of their mandatory foreign-currency reserve requirements. The directive, issued by the Bank of Angola on July 2 and published on Thursday, allows the yuan to be held alongside the U.S. Dollar, the euro, and the South African rand. These mandatory reserves are funds that financial institutions must keep with the central bank to manage liquidity and support stability within the banking system.

This regulatory adjustment follows decades of deep commercial ties between the two nations, with China consistently acting as Angola’s primary trading partner. China has purchased a large portion of the nation’s crude oil exports while financing extensive infrastructure projects, including roads, railways, and power facilities. The decision to incorporate the yuan into the reserve framework aligns Angola’s banking rules with the existing structure of its trade and investment flows.

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While the U.S. Dollar remains the dominant global reserve and trade currency, African nations are increasingly integrating the Chinese currency into their domestic frameworks. This trend is driven by practical efforts to reduce transaction costs and mitigate foreign-exchange risks associated with relying on the dollar as an intermediary for trade with China. Importers often face additional fees and settlement delays when routing transactions through the dollar, and many African governments are seeking to diversify their holdings to manage balance-of-payment pressures.

A central pillar of this shift is the growing adoption of the Cross-border Interbank Payment System (CIPS), China’s alternative to the SWIFT network, which allows financial institutions to process transactions in yuan directly. Several major African institutions have deepened their engagement with this infrastructure to bypass Western-dominated clearing systems:

• Standard Bank (South Africa): Connected to CIPS in November.
• Afreximbank (Egypt): Secured direct CIPS membership in June 2025.

Beyond reserve management, the use of the yuan is expanding into debt and treasury operations across the continent. Kenya has converted some of its dollar-denominated Chinese railway loans into yuan, and Nigeria recently renewed a bilateral currency swap deal with China. Similarly, Egypt and China signed agreements during a visit by Chinese Premier Li Qiang to Cairo, aimed at increasing yuan use in trade and investment, including the expansion of the UnionPay system.

Despite these developments, analysts remain cautious regarding the scope of the shift. While yuan-denominated payments are becoming more visible in trade finance, the currency currently accounts for a small percentage of global reserves. Lauren Johnston, a senior research fellow at the AustChina Institute, noted that Africa is being utilized as a strategic testbed for Beijing’s currency goals.

The movement reflects broader shifts in global financial architecture, influenced by the expansion of the BRICS+ bloc. As China continues to encourage overseas entities to raise funding in the yuan, African states are adjusting their financial policies to enhance resilience. Looking ahead, observers expect the role of the yuan in African trade and finance to continue its steady growth as regional institutions, such as Ecobank, pursue direct settlement systems to eliminate reliance on dollar intermediaries.