17 Jan 2016

The strength of the Pula is to ‘slightly’ increase following the adjustment of the rate of crawl by 0.38 per cent, analysts have said.

A press statement from the Ministry of Finance and Development Planning states that the minister has been given a go ahead by the President to recommend an upward adjustment of the rate of crawl which has been set at zero during 2015.

Renowned economist, Dr Keith Jeffries, managing director of Econsult however said the rate was very small, “almost too small to be visible.”

He said the impact would be a relatively stronger Pula which would help maintain a low inflation rate. However, he was puzzled as a stronger currency makes exports expensive.

The press release, meanwhile, states that the annual review of the Pula basket of currencies is done to keep up with monetary policy developments in Botswana’s major trading partners and to maintain a stable and competitive real effective exchange rate.

The Pula basket of currencies comprises the South African Rand and the International Monetary Fund (IMF) Special Drawing Rights (SDR) which consists of the US Dollar, Japanese Yen, the Euro and the British Pound Sterling.

During 2015, the weights of the Pula basket of currencies were 50 per cent South African Rand and 50 per cent SDR, with the rate of crawl set at zero per cent per annum.

The ministry states that the Pula basket has remained unchanged, with only the rate of crawl adjusted with effect from 1 January 2016. Ends