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Collapsed Rand Investigated

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The investigation into the collapse of the rand has started, with the Competition Commission targeting six major financial institutions implicated in currency manipulation.

The commission confirmed that this probe would reveal the forces behind the depreciation of the currency in the last few years.

Spokesperson for the Competition Commission Itumeleng Lesofa said they had started the investigation. “The commission is unable to provide detailed information regarding the status of the investigation,” said Lesofa.

The probe was launched by Competition Commission head Tembinkosi Bonakele in May last year following a huge fine imposed by US and UK authorities on six major financial institutions involved in currency manipulation.

The US and UK regulators fined the six banks a total of $5.6 billion (R92bn).

JP Morgan Chase, Barclays Bank, Royal Bank of Scotland and Citigroup all pleaded guilty to foreign exchange manipulation.

Swiss-based UBS AG and Bank of America were also slapped with the multibillion-dollar fine.

US Justice Department top officials said for five years the banks had used chatrooms to manipulate currency prices almost daily.

Shortly after this Bonakele announced the same investigation in South Africa to get to the bottom of the collapse of the rand.

He said they had initiated investigations against BNP Paribas, Citigroup, Barclays Bank and JP Morgan Chase.

The commission was also investigating Investec and Standard Chartered Bank.

However, Lesofa would not give details on the investigations.

Bonakele said last year this investigation was in line with other probes in the US and UK.

It would unmask cartels where they operated. Their operations impacted on the value of the local currency and the Competition Commission would not tolerate this conduct.

In 2002 former president Thabo Mbeki launched a commission of inquiry into the collapse of the rand after ex-South African Chamber of Business chief executive Kevin Wakeford blew the whistle on currency manipulation. He fingered three major companies in the collapse of the rand.

Mbeki appointed the Myburgh Commission of Inquiry. At the time the rand had collapsed from R7.60 to R13.84 to the US dollar in 2001.

Wakeford warned that if this practice was not stopped, the rand would go down to R20, R30, R40 and possibly R50 to the US dollar.

However, the rand managed to claw its way back and regained 35 percent of its value. But in 2013 it sank again and breached the psychological barrier of R10 to the US dollar. Its collapse continued in 2014 and 2015, reaching new lows of R14 to the US dollar, and is currently at R16.48 to the greenback.

The ANC has been trying to find measures to rein in the ailing economy.

President Jacob Zuma and Finance Minister Pravin Gordhan are expected to announce some of the measures to fix the economy during the State of the Nation address in February. IOL


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