Gaolathe defends Pula move, cautions banks

Addressing Parliament this afternoon, Gaolathe said there was clear evidence that commercial banks were maintaining uncompetitive trading margins and engaging in unreasonable pricing practices, despite the market's foreign exchange availability.

Government recently raised the Pula’s downward rate of crawl downwards, increased banks’ trading margins for foreign currency trade with the Bank of Botswana and raised the threshold that banks can approach the BoB for currency to $5 million from $1 million. The two latter changes are designed to make it more expensive for banks to access foreign currency from the BoB and rather trade amongst themselves, in order to preserve the reserves as the diamond slump has reduced forex inflows.