Banks reap fruits of forex framework changes

Following the July changes to the exchange rate framework made by the Bank of Botswana (BoB), commercial banks have had 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 the banks from +/-0.5 percent to +/-7.5 percent, as a way of protecting 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.