Wednesday, July 24, 2024

Pula appreciated by 2.2% against rand in February

The central bank, Bank of Botswana has said that the local currency, the pula, appreciated by 2.2 percent against the South African rand and depreciated by 1.9 percent against the IMF Special Drawing Rights (SDR) over the one-month period to February 2023. It depreciated by 3.5 percent against the US dollar, 1.2 percent against the euro, 1.1 percent against the British pound and 0.6 percent against the Chinese renminbi, while it appreciated by 1 percent against the Japanese yen.

Over the twelve months period to February 2023, the nominal Pula exchange rate appreciated by 5 percent against the South African rand and depreciated by 8.4 percent against the SDR. Against the SDR constituent currencies, the Pula depreciated by 12.7 percent against the US dollar, 7.9 percent against the euro, 3.8 percent against the Chinese renminbi and 3.1 percent against the British pound, while it appreciated by 3 percent against the Japanese yen.

Over the twelve months period to January 2023, the nominal Pula exchange rate appreciated by 1.7 percent against the South African rand and depreciated by 6.2 percent against the SDR. Against the SDR constituent currencies, the Pula depreciated by 9.1 percent against the US dollar, 6.4 percent against the euro, 3.7 percent against the Chinese renminbi and 1.2 percent against the British pound, while it appreciated by 2.5 percent against the Japanese yen.

The latest data will be appreciated by firms in the Mining and Quarrying, Manufacturing, Construction as well as Real Estate sectors who have in the past viewed the Pula/Rand exchange rate as unfavourable. 

In a survey carried by the central bank in the last quarter of 2022, most firms in these sectors shared that it has been costly to do business in Botswana as the Pula was not strong enough against the South African rand.

The central bank suggested in the survey that the sentiment might be justified by the fact that, “…..these firms source most of their raw materials from South Africa”. 

For 2022, the Bank of Botswana’s implementation of the exchange rate policy entailed the maintenance of an annual downward rate of crawl of 2.87 percent. 

The downward rate of crawl was implemented from May 1, 2020 with a view to enhancing domestic industry competitiveness in response to the adverse impact of the COVID-19 pandemic on the economy. The Pula basket weights were also maintained at 45 percent for the South African rand and 55 percent for the SDR, guided by Botswana’s trade pattern and international transactions. According to figures shares by the central bank, in the twelve months to November 2022, the Pula depreciated by 3.8 percent against the South African rand and 2.1 percent against the SDR. Against the SDR constituent currencies, the Pula depreciated by 8.1 percent against the US dollar, while it appreciated by 12.4 percent against the Japanese yen, 3 percent against the Chinese renminbi, 2.3 percent against the British pound and 0.4 percent against the euro. 

The prevailing exchange rates follows a decision by the government to maintain the Pula basket weights at 45 percent South African rand and 55 percent SDR for 2023, and adopt a downward rate of crawl of 1.51 percent per annum. 

RELATED STORIES

Read this week's paper