Foreign reserves’ drop threatens pula value

Friday, June 13, 2025 | 280 Views |

In need of support: The pula’s value is backed or “defended” by the foreign reserves

The drop in foreign exchange reserves, which fell P18.4 billion between March 2024 and March 2025, has triggered concerns about the value of the pula and the possibility of sudden shocks to the national currency, BusinessWeek has learnt.

The prolonged decline in diamond receipts, coupled with steady imports and the lack of other strong foreign currency earners, has meant a slide in the reserves over the months.

In January, the Bank of Botswana (BoB) increased the trading margin used for foreign exchange transactions to banks, from 0.125 percent to 0.5 percent, as a way of pushing the banks to trade amongst each other and with firms that are holding foreign currency.

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