Diamond Slump: Botswana Devalues Pula Again
July 24, 25
(IDEX Online) - Botswana has devalued its currency for the second time in eight months, and is predicted to do so again as the sharp decline in diamond revenue batters its economy.
Earlier this month the Bank of Botswana said it would allow the pula to weaken by as much as 2.76 per cent this year against a basket of other currencies.
It follows a similar move in December 2024, when it said it would let the pula depreciate by 1.51 per cent. Experts at Citigroup are predicting another devaluation before the end of the year.
David Cowan, the bank's chief Africa economist said this week: "At this point in time another devaluation of Botswana pula cannot be discounted later this year, while interest rates may also have to increase significantly."
Botswana, the world's second biggest diamond producer, has been hit hard by the downturn in global demand for natural diamonds, and by sliding prices.
Diamond revenue halved in 2024 and production for this year is expected to be down by at least a quarter.
Diamonds account for about 25 per cent of Botswana's total GDP and 75 per cent of its foreign exchange earnings.
Pic shows a diamond sorter, pictured on a 100 pula note.