While the Pula appreciated in nominal terms against major international currencies, it depreciated by 8 percent against the rand, resulting in an overall stable nominal effective exchange rate of the Pula.
However, as inflation was higher in Botswana than in trading partner countries, largely due to the impact of VAT, the real effective exchange rate of the Pula appreciated by 2.6 percent in the year to December 2002; and to that extent, Botswana’s trade competitiveness was eroded.