What Is the BWP (Botswana Pula)?
BWP is the currency code for the currency of Botswana, the pula. The Botswana pula is made up of 100 thebe or shield coins, and the symbol “P” represents it. The Bank of Botswana issues the Botswana pula.
Pula means "rain" or "blessing" because rain is so scarce in Botswana and is considered valuable.
- The Botswana pula is the official currency of Botswana and trades under currency code BWP.
- The Botswana currency is pegged against a basket of currencies including the South African rand.
- Botswana is a fast-growing country, as of 2018, with major industries including mining and cattle processing.
Understanding the BWP (Botswana Pula)
For valuation, the Botswana pula (BWP) pegs itself to a basket of currencies, which operates using a crawling band exchange rate using the International Monetary Fund's special drawing rights (SDR) and the South African rand as reserve assets.
Special drawing rights (SDR) is an international monetary reserve currency through the International Monetary Fund (IMF). SDR operates as a supplement to the existing money reserves and acts as a reserve asset for member countries. Reserve assets include currency, commodities, or other financial capital held by central banks, to restore confidence in the financial soundness of the country's money if needed.
According to World Bank data, Botswana experienced 1% annual inflation and a 4.5% annual GDP growth in 2018. Botswana's economy is fueled by mining, tourism, cattle, textiles, and salt.
History of the Botswana Pula (BWP)
The BWP was first printed in 1976 when it replaced the South African rand (ZAR) as the country's currency. The Botswana pula is fully convertible due to the abolishment of foreign exchange controls of regulatory limitations on the purchase or sale of the currency in 1999. Before the Rand, Botswana used the currency of many other countries.
- British pound sterling until 1920
- South African pound until 1961
- South African Rand until 1976
At its introduction on August 23, 1976, the pula's valuation and exchange rate were on a one to one basis with the Rand. In Botswana, August 23 is officially Pula Day.
The BWP has gone through many changes over the years. On launching, there were only four varieties of bank notes with values of P1, P2, P5, and P10, and five coins, the 1t, 5t, 10t, 25t, and 50t. Over the years, the government has introduced higher value notes. Due to the more frequent use of the coins, the government split them into smaller denominations.
In 2000, the introduction of a new P50 note, which features the portrait of the first President of Sir Seretse Khama, occurred. Also introduced in 2000, the P100 has a picture of the three chiefs, Bathoen I, Khama III and Sebele I, who ruled during the Bechuanaland, British protectorate period. Bechuanaland became Botswana in 1966. Also in 2000, a new p5 coin went into circulation.
The introduction of an entirely new family of banknotes, including a new P200 denomination, happened in August 2009. The new banknotes are significant because the P200 note features an image of a woman teaching. The illustration speaks to the country recognizing the signification and importance of both education and women’s contribution to the nation.
Example of Exchanging Botswana pula into United States Dollars
Assume that the rate of the USD/BWP is 10.86. This means it costs 10.86 pula buy one U.S. dollar.
If the rate rises to 12, that means the pula has lost value relative to the USD, since it now costs more pula to buy the U.S. dollar. If the rate falls to 9.5, the pula has increased in value relative to the USD, since it now costs fewer pula to buy the USD.
To find out how many U.S. dollars it takes to buy one pula, divided one by the USD/BWP exchange rate. This will give the BWP/USD rate. For example, if the rate is 10.86 for the USD/BWP, then the BWP/USD rate is 1/10.86, or 0.09208. This means it costs $0.09208 to buy one pula.