Matambo gives Pula room to escalate

A statement yesterday indicates that minister Kenneth Matambo had recommended that the weights in the basket of currencies through which the Pula is valued, remain the same, while the rate of crawl is adjusted marginally. The recommendations were part of the annual review of the Pula basket. The Pula’s value is gauged against a basket of currencies containing the US Dollar, Japanese Yen, British Pound and Euro – collectively known as Special Drawing Rights currencies – and the South African Rand. The SDRs and the Rand are assigned weights within the basket and for 2015, these were kept at 50 percent each, or balanced, meaning the Pula was equally exposed to movements from both sides.

The rate of crawl is a nominal adjustment of the Pula’s value against these currencies, with a view to maintaining Real Effective Exchange Rate stability (REER), as gauged by the inflation prevailing in the countries of the basket.