Approximately R1 trillion changed hands daily between 2007 and 2013 in currency trading, the divisional manager for cartels at the Competition Commission, Makgale Mohlala, told the Competition Tribunal.
Mohlala was speaking to the SABC following Standard Chartered Bank (SCB) admitting to engaging in the manipulation of the rand, alongside 17 other banks accused of engaging in unethical conduct, earlier this week.
On Wednesday, the bank became another commercial bank that admitted to wrongdoing and agreed to pay a penalty of R42 million to the Competition Commission for its role in conspiring to rig trades involving the US dollar-rand currency pair.
The commission announced that it had entered into a settlement agreement with Standard Chartered, which “admitted liability” and agreed to pay an administrative penalty of R42.7m.
Mohlala said that this had an effect on the trading market.
“There are buyers and sellers. South African firms that want to buy internationally, they’ll need to acquire the dollars in order for them to buy in the international market,” he said.
“If they buy in dollars that are expensive, because of the manipulation, they are losing money. South Africans that want to sell in the international market, have to sell using dollars, so if they have to sell using a dollar that has been weakened by manipulations, they are losing money.”
The Star reported that the EFF called for tougher sanctions against banking institutions that played a role in collusion by lenders to manipulate the rand.
The EFF lambasted the South African Reserve Bank, saying the apex bank failed to oversee the country’s banking sector.
EFF national spokesperson Sinawo Thambo said: “The failure to deal with currency manipulation, however, is just a symptom of a banking sector that is a law unto itself.
“The South African Reserve Bank has failed to oversee the banking sector because of friendship-based nepotism, which has led to the revolving door of staff members between the banks, the National Treasury, and the Reserve Bank.”
On Wednesday, the commission said it welcomed the latest landmark settlement agreement with the British multinational bank in which the bank acknowledged and admitted to a currency manipulation case and agreed to pay an administrative penalty of R42.7m.
Commission spokesperson Siyabulela Makunga said that was a victory for South Africa.
Meanwhile, Palesa Nungu in an opinion piece written for IOL, said the bank’s confession served as one of the major contributing factors to the persistent inflation rates in South Africa, and yet the consequence appeared to be a mere slap on the wrist – a R42.7m penalty.
She said that this had a direct impact on consumers.
Nungu said: “Changing the value of money has effects that go far beyond numbers. This practice has had a big effect on South Africa's economy, especially since the country relies so much on goods from other countries. Changing the value of currencies has a direct effect on the prices of imported goods in local markets. Because a lot of the goods in South African stores are imported, changes in the value of the rand have a big effect on their prices.”