SA should draw lessons from collapse of rand manipulation case

Financial services sector analyst and economist Redge Nkosi has called for South Africa to enact tougher competition laws following the dismissal of cases against some of the 28 banks accused of manipulating the rand.

In a recent ruling by the Competition Appeal Court of SA, local and international banks implicated in the rigging of the rand were let off the hook due to procedural issues and insufficient evidence to prove the alleged single overarching conspiracy as alleged by the Competition Commission.

The commission initiated the case in 2015, accusing the banks of colluding to manipulate the dollar/rand foreign exchange rate between 2007 and 2013, thereby violating the Competition Act of 1998.

It is understood that three banks were granted leniency in exchange for cooperating with the commission, while only two banks settled their cases by admitting liability and paying a penalty.

Meanwhile, the remaining 23 banks challenged the Competition Commission’s referral to the Competition Tribunal.

In the judgment delivered on Monday, the court ruled in favour of several South African banks including Standard Bank, Nedbank, and FirstRand, as well as most of the foreign banks implicated in the allegations.

Glimmer of hope

Speaking to Sunday World on Tuesday, Nkosi stated that there is a glimmer of hope as some banks are yet to face trial.

He emphasised the importance of learning from this case and stressed the need for accountability.

Nkosi suggested that key institutions like the Reserve Bank should take responsibility and uphold their mandates and authority.

A central bank’s role in forex (foreign exchange) trading involves managing the country’s foreign exchange reserves and occasionally intervening in the forex market to influence exchange rates or maintain currency stability, as part of its monetary policy tools.

However, the extent of intervention depends on the central bank’s objectives and the economic conditions of the country.

“The case has not collapsed, it continues with other banks that have not been let off the hook,” said Nkosi.


“It is good nonetheless that the case continues, and it is a lesson for authorities in South Africa, especially the Reserve Bank, to wake up and do its job appropriately.”

Guilty parties must face the music

Nkosi emphasised that the implicated banks should be held accountable for their offences, and he called for stricter antitrust laws and enhanced monitoring in the country.

“It is fine that the court had no evidence to pin these other banks but let the case continue so that lessons are learnt, banks are penalised, and that tomorrow authorities in this country, [particularly] the Reserve Bank and the National Treasury, put in place measures necessary to ensure that these culprits and others do not repeat this.

“Also, put new regulations that deter these banks from manipulating the currency.”

Nkosi acknowledged that the manipulation occurred due to offshore trading, identifying it as the root cause of the problem, as the country struggled to oversee such transactions.

Offshore currency trading, often known as offshore or forex trading in foreign jurisdictions, involves buying and selling currencies in foreign exchange markets through a brokerage or financial institution outside the trader’s home country.

Onshore forex trading, on the other hand, refers to engaging in forex trading activities within one’s own country or region, usually involving local currency pairs or trading platforms.

One of the main advantages of onshore forex trading is reduced exposure to exchange rate fluctuations and potentially lower transaction costs, as traders deal with familiar currencies and adhere to local regulatory frameworks.
It also mitigates the risk of currency manipulation.
Domestic currency trading mooted

Nkosi proposed that the rand should be traded onshore, making it easier for the Competition Commission to oversee and regulate the currency exchange market.

“The rand should be traded onshore not offshore. In other words, we should not be allowing the rand to be traded offshore without us checking on it. Or simply bring all the trading onto the domestic price.”

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