Govt boosts the Pula

SHARE   |   Monday, 18 January 2016   |   By Kabelo Adamson
Govt boosts the Pula

The decision by the government to maintain the Pula basket weights at 50 percent South African rand and 50 percent Special Drawing Rights (SDR) and change the rate of crawl is a welcome move aimed at strengthening the Pula, experts say. The rate of crawl has been changed from zero to an upward crawl of 0.38 percent per annum effective 1st January 2016. Moatlhodi Sebabole, an economist at FNB Botswana, says the move is meant to strengthen the local denomination particularly against the US Dollar. “The appreciation comes on the backdrop of the weak Pula against the US Dollar and to protect the balance of payments,” Sebabole said in an interview on Friday.

Moatlhodi said the relationship between the Pula and the Dollar is very important as the country exports its commodities in the US Dollar currency. The announcement means the Pula will appreciate against other foreign currencies at a rate of 0.38 percent annually which is a welcome development, according to the experts. An economist at Barclays Bank, Katso Tshipinare, said that monetary and exchange rate policies are important for the development of the economy. "Monetary policy in Botswana is growth supportive and adequate in anchoring inflation expectation within the objective range in the medium term,” he said. He said bilaterally the Pula remained volatile against major currencies in 2015 and is expected to remain as such into 2016.

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“This is attributable largely to the appreciating Dollar following some interventions on the Yuan by authorities,” Tshipinare said. The change in the crawl rate follows the review of the Pula basket which is in line with the monetary policy developments in Botswana’s major trading partner countries with a view of maintaining a stable and competitive exchange rate of Pula. The Pula basket is made of the South African Rand and the International Monetary Fund (IMF” SDR which consist of UD Dollar, Japanese Yen and the British Pound.



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