No evidence of currency manipulation, says Tito Mboweni
In reply to EFF question, finance minister says Competition Commission is investigating a case of price fixing and market allocation in the trading of foreign-currency pairs
The National Treasury and SA Reserve Bank do not have evidence that any bank has taken part in currency manipulation, according to finance minister Tito Mboweni.
Mboweni was responding to a written question from EFF MP Makoti Khawula, who had asked whether the Treasury had investigated the impact of the manipulation of the rand by various commercial banks, “in particular Absa, as found by the Competition Commission; if not, why not; if so, what were the findings?”
In his written reply last week, Mboweni said the Treasury had not investigated such impact, as it and the central bank do "not have any evidence that any bank has taken part in currency manipulation, as indicated in our previous replies to oral questions”.
However, Mboweni said the Treasury was aware that the Competition Commission was investigating a case of price fixing and market allocation in the trading of foreign-currency pairs involving the rand, and that it had referred the matter to the Competition Tribunal for prosecution.
In 2015, the Competition Commission began investigating market manipulation in currency pairs involving the rand by a host of local and international banks, including Bank of America Merrill Lynch, BNP Paribas, JPMorgan Chase, Investec, Standard New York Securities, HSBC, Standard Chartered, Credit Suisse Group, Standard Bank, Nomura, Macquarie, Absa and Barclays.
Citibank, the only bank locally to plead guilty, paid an “administrative penalty” of R69.5m.
Earlier in 2019, the Competition Commission said it would use a recent settlement between British banking group Standard Chartered and US authorities to strengthen its case.
Standard Chartered recently reached an agreement with the New York state department of financial services after admitting to manipulating currencies, including the rand, between 2007 and 2013. In terms of the agreement, which has subsequently become a court order, Standard Chartered will pay a fine of $40m. It is also required it to take remedial action, including disciplinary procedures against employees found guilty of the contraventions.
In his reply to the question from the EFF, Mboweni said the currency market is a deep and liquid market, and it is difficult to determine any material or long-lasting impact of any one transaction on the level or value of the currency.
“It is important for members to differentiate between the impact of any transaction on consumers and the impact on the value of the rand – the investigation before the Competition Commission appears to be related more to the conduct of bank traders towards clients, rather than providing evidence of their affecting the actual value of the rand,” he said.
“We should all await the outcome of the Competition Commission’s investigation ... I am also happy to invite [Khawula] to provide any other evidence she may have on any currency manipulation to the commission and/or National Treasury.”