Sunday, May 29, 2022

Pula continues poor performance against US dollar

The local currency, Pula continues to trade on a downward trend against the US dollar, a trend that analysts says is mixed bag of fortune. By close of business on Friday, Pula was also weaker against other major trading currencies such as the euro and the British pound. The local unit however gained traction relative to the South African Rand and Japanese Yen.

Data provided by the central bank on Friday shows that the local unit tumbled by 1.4 percent to the dollar, 1.3 percent to the euro and firmed by 0.9 percent to the rand during the week.

By close of business on Monday, Pula appreciated only against the South African Rand (0.35%) while it depreciated by 0.59%, 0.30%, 0.36% and 0.34% against the Euro, Pound and Japanese Yen respectively.

The Bank of Botswana financials shows that the Pula only went just above P9.10 mark against the US Dollar by February this year. Thereafter the local currency has been trading below that mark.

On a year to date, the Pula has shed over 4 percent and2.7 percent to the greenback and British pound respectively though it has appreciated by 2.3 percent to the euro and about 1 percent to the free floating rand.

The US dollar headed for its ninth straight week of gains on Friday, some measure of how the economic fortunes of the United States and its major economic peers are diverging after six years of financial turmoil.

Benchmark 10-year US Treasury yields rose to their highest in over a month, while European stocks shrugged off weakness in Asia to inch higher.

A broad rise for the greenback was the main bet of most major investment houses this year but it has taken a very long run of relatively good US numbers and a surge in concern over European and Japanese growth for the currency to deliver.

At the same time the rand ended the week at levels of R10.99/US$ after vaguely breaching the R11/$ level on weaker economic data which raised worries about the outlook of the SA economy. Statistics SA revealed that, SA manufacturing production declined by 7.9 percent while mining output for July fell by 7.7 percent year on year.

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