What Is the BWP (Botswana Pula)?
BWP is the ISO international cash code for the dependable international cash of Botswana, the pula, and the brand “P” represents it. The Monetary establishment of Botswana issues and manages the pula. Pula means “rain” or “blessing” on account of rain is so scarce in Botswana and is thought of as precious. The pula is made up of 100 thebe, as a result of this “offer protection to.”
Key Takeaways
- The Botswana pula is the dependable international cash of Botswana and trades beneath ISO international cash code BWP.
- The pula is pegged to a basket of currencies, weighted against the South African rand and IMF explicit drawing rights.
- Botswana is a somewhat fast-growing country, with number one industries along side mining and cattle processing.
Understanding the Botswana Pula
The Botswana pula is pegged to a basket of currencies, which operates the use of a crawling band business protection the use of explicit drawing rights (SDR) and the South African rand (ZAR) as reserve belongings.
Explicit drawing rights are an international monetary reserve asset issued by the use of the World Monetary Fund (IMF). They serve as as a supplement to present money reserves and act as a reserve asset for member international locations. Reserve belongings include international cash, commodities, or other financial capital held by the use of central banks, to restore self trust inside the financial soundness of the country’s money if sought after.
In keeping with Global Monetary establishment knowledge, Botswana registered 2.97% annual GDP expansion in 2019 and a 2.77% increase in inflation. Botswana’s monetary machine is fueled principally by the use of mining, tourism, cattle, textiles and salt.
History of the Botswana Pula
Investopedia / Sabrina Jiang
At the time of its independence in 1966, Botswana (along with neighbors Lesotho and Swaziland) continued to use the South African rand as its international cash as a member of the Rand Monetary Space (RMA). In 1973, the 4 international locations began negotiations on a brand spanking new international cash and banking treaty, known as the Rand Monetary Space agreement, that may have allowed the smaller economies to issue their own national currencies while continuing to easily settle for the rand as legal refined. However, quicker than the pact used to be as soon as signed in 1974, Botswana withdrew from negotiations and offered its intentions to prepare its non-public central monetary establishment.
The pula debuted on August 23, 1976, a day that is celebrated once a year as Pula Day. The international cash used to be as soon as first of all pegged to the U.S. dollar, with P1 equaling $1.15. The South African rand used to be as soon as moreover pegged to the U.S. dollar at the equivalent price, implying parity between the pula and the rand. The pula basket used to be as soon as offered in 1980 after the rand moved off its dollar peg.
The Botswana pula is actually convertible after foreign currencies echange controls had been abolished in 1999. Forward of the rand, Botswana used:
- British pound sterling from 1885 to 1920
- the South African pound from 1920 to 1961
- the South African rand from 1961 to 1976
The pula has long gone through many changes since its debut in 1976. The international cash offered with 4 monetary establishment notes inside the denominations of P1, P2, P5 and P10, along with 5 money issued in denominations of 1t, 5t, 10t, 25t and 50t. Over the years, the government offered higher price notes and money, similar to P1 and P2 money, owing to their further commonplace use.
In 2000, the Monetary establishment of Botswana offered a P5 coin and a brand spanking new P50 understand, which choices the portrait of Sir Seretse Khama, the rustic’s first president. Moreover offered that one year used to be as soon as the P100 understand bearing the pictures of the three chiefs—Bathoen I, Khama III and Sebele I—who were given British protection over Bechuanaland (what is supply day Botswana).
In August 2009, the Monetary establishment of Botswana offered a brand spanking new family of banknotes, along side a brand spanking new P200 denomination. The P200 understand choices an image of a woman instructing students, which is meant to emphasize coaching and the contribution of ladies to the country’s development.
BWP inside the Forex Market
Suppose the velocity of the USD/BWP is 10.86. This means it costs 10.86 pula acquire one U.S. dollar.
If the velocity rises to 12, that means the pula has out of place price relative to the USD, as it now costs further pula to buy the U.S. dollar. If the velocity falls to 9.5, the pula has reinforced in price relative to the USD, as it now costs fewer pula to buy the USD.
To be informed the way in which many U.S. greenbacks it takes to buy one pula, divided one by the use of the USD/BWP business price. This will likely an increasing number of give the BWP/USD price. For example, if the velocity is 10.86 for the USD/BWP, then the BWP/USD price is 1/10.86, or 0.09208. This means it costs $0.09208 to buy one pula.
