Africa-Press – Botswana. In an effort to support Botswana’s export competitiveness and ensure long-term economic stability, the Ministry of Finance and the Bank of Botswana have approved the implementation of asymmetric, or unequal, Pula trading margins.
The Central Bank has reduced the rate at which Botswana buys foreign currency from commercial banks, lowering it from 7.5 per cent to 3 per cent from the central parity.
This adjustment remains largely unchanged from previous revisions made in July and is expected to enable local exporters to earn more Pula per unit of foreign currency. It is also anticipated to strengthen the incentive for converting export proceeds into Pula and increase the supply of foreign currency.
According to a media release from the Ministry of Finance, the bank has maintained the current downward rate of crawl at 2.7 percent, reflecting the updated focused inflation differential between Botswana and its trading partner countries.
By keeping the sell rate at 7.5 percent, the government aims to encourage active interbank trading and limit reliance on the central bank for foreign exchange. This is expected to support the preservation and potential accumulation of foreign exchange reserves.
The release further highlights that these measures are designed to preserve domestic industry competitiveness in external markets and against imports, while supporting price stability and maintaining inflation within the 3-6 percent objective range.
Moreover, the adjustments are intended to enhance local industry competitiveness, strengthen external sustainability, and safeguard the official foreign reserves. This will reinforce the resilience of the exchange rate regime and preserve policy discretion.
The government reviews its exchange rate twice a year, making adjustments upwards or downwards through a crawling band exchange rate regime. Under this framework, the Pula is pegged to a basket of currencies, including the South African rand. The next review of the Pula’s exchange rate is scheduled for June 2026.
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