Botswana plans to let its currency, the pula, depreciate by 2.76% over the next year—nearly double the rate set last December—as the country grapples with economic pressure from a global diamond market slump. The depreciation, part of its biannual crawling band exchange rate regime, aims to boost the competitiveness of local goods and curb foreign exchange demand. Officials warn that declining reserves, now at just over five months of import cover, could destabilize the exchange system if left unchecked. While Botswana’s foreign reserves remain relatively healthy compared to other African nations, the downturn has cast a shadow over its long-standing reputation as an economic success story.
Reuters
