Pula weakens against rand as market pressures persist
Lewanika Timothy | Monday February 9, 2026 06:14
The Bank of Botswana (BoB) foreign exchange data shows that the pula depreciated by 0.9 percent against the rand in the fourth quarter of 2025, closing the year at ZAR1.29 to BWP 1.00, compared to R1.3094 to P1.00 at the end of the third quarter.
Over the same period, the pula recorded little movement against the US dollar, weakening marginally from P13.32 to P13.33.
Local economic consultancy Econsult, led by former central bank deputy governor Keith Jeffries, has noted that the foreign exchange movements were non-reflective of true market price movements.
In the firm’s fourth-quarter economic update, released this week, Jefferis said the official figures understate the extent of pula weakness against the rand over the course of 2025, pointing to deeper structural pressures in the foreign exchange market.
Econsult estimates that the pula lost around 12% of its value against the rand during 2025, with approximately seven percent linked to changes in exchange rate policy, and five percent being attributed to the strengthening of the rand.
Jefferis said that the widening of the Bank of Botswana’s foreign exchange spreads in 2025 significantly distorted published exchange rates, arguing that official mid-rates are “no longer representative of market conditions”.
“Besides the changes to the exchange rate mechanism in July and December 2025, the dominant driver of bilateral exchange rates has been the weakness of the US dollar and the strength of the SA rand,” he said. “This has tended to mitigate the devaluation of the pula against the USD during the year, but has accentuated the devaluation against the SA rand. “In practice, the pula has lost around 12% of its value against the ZAR during 2025, which has an impact on import prices. “Of this, around seven percent is due to the change in exchange rate policy, and five percent due to the strength of the rand.”
In July, the BoB increased its margins for foreign currency trade with the 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.
In December, the central bank adopted an asymmetric rate, which included a reduction in the rate at which the central bank buys foreign currency from commercial banks, from 7.5 percent to three percent, whilst maintaining the rate at which the BoB sells foreign currency to banks at minus 7.5 percent.
Officials said the adjustment would potentially enable local exporters to earn more pula per unit of foreign currency, strengthening the incentive to convert export proceeds into pula and increasing the supply of foreign currency.
Econsult said the move to widen the spread has led to a discrepancy between published rates and ongoing market rates as tracked by other market watchers such as Bloomberg.
“Given the dramatic widening of official spreads, the mid-exchange rates published by the BoB are no longer representative of market conditions. Nor are the public rates published by the banks,” Jefferis noted. “A weakening pula against the rand has direct implications for import prices in Botswana, given the country’s heavy reliance on South Africa for food, manufactured goods and construction inputs.”
Retailers and importers have warned that the sustained depreciation of the pula against the rand feeds into higher costs for consumers, even when inflation appears contained in headline figures.