Banks' earnings rise on forex trades

Mbongeni Mguni | Thursday January 22, 2026 15:30

Preliminary Bank of Botswana (BoB) figures released recently show that between January and June 2025, non-interest income earned by the country’s commercial banks averaged P352.8 million, before rising to an average of P548.1 million between July and October. The difference, analysts say, was the July changes to the exchange rate framework made by the BoB, giving commercial banks greater room in the margins they charge both buyers and sellers of foreign currency (forex).

In July, the BoB increased its margins for foreign currency trade with banks from +/-0.5 percent to +/-7.5 percent, as a way of protecting against further erosion of the official foreign exchange reserves managed by the BoB. The move, amongst other measures, made it more expensive for banks to resort to the BoB for forex and was also designed to encourage greater inter-bank trading of forex.

Since the changes, however, complaints have swelled that banks have excessively widened the margin between what they buy and sell foreign currency for, whilst they deal with ordinary retail customers.

In December, the BoB maintained the rate at which it sells forex to banks at -7.5 percent but adjusted the rate at which it buys from them to three percent, from 7.5 percent. The central bank said the changes would potentially enable local exporters to earn more pula per unit of foreign currency, strengthening their incentive to convert export proceeds into pula, thus increasing the supply of foreign currency.