The pula's value is determined by a basket of currencies dominated by the South African rand, through a crawling-peg mechanism that makes small adjustments based on expected inflation differentials with trading partners. Although the rate of crawl is not made public, it is currently set on a modest downward path. The average exchange rate against the US dollar was stronger in 2010 owing to the appreciation of the South African rand. However, the rand is expected to depreciate to average R8.37:US$1 in 2012, from R7.32:US$1 in 2010. As a result, we expect the pula to depreciate to an average of P6.98:US$1 in 2011 and P7.57:US$1 in 2012.