28 December 2023
(Bloomberg) — Botswana will allow its currency to weaken by 1.51% against a basket of other units in 2024 as it expects local inflation will be more elevated than price growth in the economies of its trading partners.
The so-called annual downward crawl — which matches last year’s rate — will happen through small, daily adjustments that would equal 1.51% over the year through December, the Finance Ministry said in a statement Thursday.
The need for a downward adjustment in the pula “is a reflection of weak production capacity and productivity of the economy,” the ministry said. “It is also inflationary, ultimately affecting price competitiveness.”
Since 2005, Botswana has used what it terms a crawling peg to control exchange-rate policy. The pula is fixed to a basket of foreign currencies, with South Africa’s rand comprising 45% and the rest being International Monetary Fund reserves known as special drawing rights. SDRs comprise the US dollar, British pound, euro, yen and renminbi. The southern African nation then applies an annual crawl rate to the currency.
Source: https://www.bnnbloomberg.ca/botswana-to-weaken-currency-by-1-51-in-2024-due-to-inflation-1.2016057
