Tuesday, December 5, 2023

Pula firm as Botswana goes to poll

The local currency, Pula was this past week firmer against most of its major trading peers as the country prepared for elections held on Friday. The local unit only lost ground relative to the South African Rand.

Data from the central bank shows that the Pula advanced by 1.5 percent and 0.3 percent to the euro and US Dollar respectively. Still during the 4 day trading week, the local currency gave up 0.7 percent to the South African rand whose strong performance was supported by the neighbouring country’s consumer price index statistics.

On a year to date, the Pula has shed 4.6 percent to the American dollar and 2.2 percent to the pound though it has firmed by almost 4 percent to the euro.

Earlier this year, Finance and Development Planning Minister, Kenneth Matambo maintained the rate of crawl of the local currency against the weight of the currencies in the basket. The Pula basket comprises 55 percent South African rand and 45 percent Special Drawing Right, while the rate of crawl is minus 0.16 percent per annum. Last year the government disclosed both the rate of crawl of the Pula and the weight of the currencies in the basket after close to a decade of non-disclosure. The move, according to economic commentators, was made in a bid to foster transparency of Botswana’s exchange rate mechanism. ??The Central Bank said in statement circulated earlier this year that, “the parameters of the crawling band exchange rate mechanism for 2013 are being maintained, as they have continued to contribute to the stability of the Real Effective Exchange Rate, which is critical for economic diversification and job creation.”

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.


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