The Reserve Bank has broken its silence on why it has not intervened in the controversial currency manipulation scandal, saying it was assisting the Competition Commission in its investigation.
Reserve Bank governor Lesetja Kganyago gave the reasons after the Competition Tribunal last week confirmed that lender Standard Chartered Bank had reached an agreement following its involvement in the so-called forex cartel case, paying an administrative penalty of R42.7-million.
The British multinational also agreed to cooperate in the prosecution of a case that involves 28 banks accused of manipulating of the US dollar and rand currency pair between 2007 and 2013.
Speaking at the announcement of the interest rates decision, he said the commission approached the bank due to its expertise in the foreign exchange market.
“They are embarking in a process, they approached us and asked us for assistance because we are in a foreign exchange market,” said Kganyago.
“We spent hours and hours with them, we provided all the assistance they required. Should they require any further assistance with us, they will get it.
“But they are the competent authority to investigate any allegations of market abuse and market manipulation.
“They must be given the space to do their work and follow their processes.”
Probe not instituted
Kganyago said the bank had not instituted the probe because there were no breaches of exchange control regulations.
He said when in 2009 the rand was appreciating against the US dollar, there was a belief that somebody was making the life of local exporters a living hell.
“No commission of inquiry was called then. In 2015, we picked up globally that there were reports of market abuse by institutions in various [countries].”
He said they asked former Reserve Bank senior deputy governor James Cross to lead a process to establish whether there were any exchange control abuses.
“Amongst its key recommends was that we must develop a code for the foreign exchange market in SA,” he said.
Kganyago added that they discovered that the Bank for International Settlements was working on a global code – which sets out principles of good practice for wholesale foreign exchange markets and provides a common set of guidance to the market, with the intention to promote a robust, fair, liquid, open and transparent market.
The Reserve Bank became part of the pledge, he said.
While they were busy with the global code pledge, the Competition Commission approached the bank that they have caught wind of the currency rigging scandal.
