Pula more Competitive

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Pula more Competitive
Pula more Competitive

Africa-Press – Botswana. Following Bank of Botswana (BoB) press release on a change in Pula basket, a number of Batswana have raised concerns over the value of the Pula, with some viewing the move as devaluation.

For economists, the introduced measure was aimed at making the Pula more competitive.

Analysts amongst them Dr Keith Jeffries of Econsult said the small change in baskets was not a ‘big deal’ and had happed regularly in the past.

“The increase in the South African Rand (ZAR) weight from 45 per cent to 50 per cent is nothing exceptional,” he wrote in his statement, adding it was long overdue as the weight has gone too far in the direction of the Special Drawing Rights (SDR).

Dr Jeffries said there was no devaluation involved in those changes – other than the downward crawl of 1.51 per cent a year, but this has been in place for several years, and has not changed.

He said the increase in the weight was not a devaluation and the change does not have an immediate impact on the exchange rate. “It will just influence the course of the Pula over a period of time against individual currencies but not its overall value.”

BoB release noted that the basket weights have been adjusted from 45 per cent South African Rand and 55 per cent International Monetary Fund (IMF) Special Drawing Rights to 50 per cent each.

“This is expected to moderate the volatility of the Pula against the South African Rand and promote the competitiveness of domestic goods and services in the South African market, a close important trading partner,” the central bank states in the release.

Further the BoB has maintained the downward rate of crawl of 1.31 per cent based on the forecast inflation differential between Botswana and its trading partner countries, to maintain domestic industry competitiveness against imports and external markets without compromising price stability.

It is said that the Pula will be more stable against the Rand, which is deemed positive as the Pula/Exchange rate is important for most firms in the country.

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