The Pula endured a difficult period last year, dropping against most of the hard currencies and the South African Rand.
Data released by the Bank of Botswana indicates that last year, the local currency fell by 8.1 percent against the US dollar, one of the single most important currencies for the local economy as it is the trading currency for rough diamonds.
While dropping against the greenback helps the export allure of diamonds for buyers in the United States, which is the world’s biggest market for the stones, the US dollar also gained significantly against other hard currencies during the year, which would impact the affordability of diamonds for buyers in those countries.
The Pula’s slide against the US dollar also meant more pressure on local fuel prices, which increased several times in 2022, before easing towards the end of the year.
According to the central bank, the Pula also shed 2.3 percent against the Euro and two percent against the South Africa, the latter being the largest source of imports for Botswana. Inflation peaked at a 14-year high last year and while it has retreated, remains well above the BoB’s targets, with much of this attributed to food and fuel prices.
In 2022, the Pula’s only gains were against the Japanese yen, the British pound and the Chinese renminbi, by 5.8, three and 0.5 percent respectively.