Currency war could catch up with Botswana

28 October, 2010 in Africa

source: The Botswana Gazette
Written by AUBREY LUTE
Wednesday, 27 October 2010 15:19

SA debates Rand devaluation, Dollar weakens
Diamonds could be too expensive for US consumers

If the US Dollar continues to slide at the current rate, consumers in America are likely to find it expensive to buy goods from Botswana. The US has the largest diamond market share. Botswana’s economy is still heavily reliant on diamonds, the biggest revenue contributor to the local bourse.

Observers have said the US currency slide was a way of addressing the imbalance created by the weaker Chinese Yuan. But the US has made it clear that it will not engage in devaluing the Dollar, saying currency is just reacting to a drop in interest rates among other factors.

This make the debate tricky on the part of Botswana because South Africa is having a debate of its own, with COSATU wanting the Rand devalued.

University of Botswana Economic lecturer, Dr Oupa Botswiri Tsheko said the Pula is pegged to a basket of currencies and the South African Rand takes about 50% of the share. He said [continue reading]

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