America’s dollar, Botswana’s problem 

During the G-10 Rome meetings held in late 1971, then US Secretary to the Treasury, John Connelly, proclaimed: “The dollar is our currency, but it’s your problem.” That was decades ago, when he was speaking before a number of other countries’ finance ministers.

This week, the Dollar index rose to a two-decade high after a decision by the Fed to hike interest rate by 75 basis points. Federal Reserve Chairman, Jerome Powell, has signalled more increases ahead, a trend which some experts argue will support the world’s reserve currency. By Thursday, the Pula was trading about P13.28 for every $1, up from P11 September last year.  

Initially (1976), the Pula was stronger than the US dollar at P1=$1.15, and equivalent to the rand, according to the Bank of Botswana (BoB). But there have been changes to the Pula exchange rate regime over the years effective 1976 when the Pula was introduced after the country left the Rand Monetary Area. Dr. Seamogano Mosanako, the Head of Communications and Information Services at the Bank of Botswana, says the framework changes over the years have included adjustment of weights, introducing the basket, discreet revaluations and devaluations, and ultimately replacing discreet changes with the crawl mechanism to enhance predictability and to avoid destabilising large adjustments.