rand

The allegations of Rand manipulation entail a global collusion among banks, with the list of banks involved in rand manipulation saga including Standard Bank, Absa, Investec, Citibank, First Rand Bank, Barclays, Merrill Lynch, HSBC, Standard Chartered, Nedbank. 

The banks allegedly colluded to artificially influence the currency’s value, specifically the dollar to rand exchange rates, and manipulated the Rand’s value in the bid-offer spread, which is the difference between the buying and selling prices of a currency. 

Standard Chartered Bank (SCB) admitted guilt in the long-standing investigation by the Competition Commission, acknowledging the manipulation of currency trading in South Africa. SCB agreed to pay a penalty of 42.7 million rand ($2.3 million). 

The case, involving 28 banks, had been ongoing since 2017, with the Competition Commission finding them guilty in March 2023. However, all banks, including SCB, have been appealing the judgment, contributing to the case’s politicization and the spread of misinformation. 

The currency manipulation negatively impacted the Rand’s value against the US dollar, affecting import costs and customer profitability, emphasizing broader issues within the global banking sector.

Minister in the Presidency Khumbudzo Ntshavheni’s statements regarding the rand manipulation case suggested that Standard & Chartered’s confession of manipulating the rand’s exchange rate was evidence of the private sector’s desire for government collapse. 

False claims about private banks making trillions of rands in profit due to manipulation circulated, with politicians, including Ntshavheni, either making or repeating these unfounded assertions. 

These allegations fueled a broader narrative of the private sector engineering the economic collapse, highlighting the impact of misinformation in shaping public perceptions.

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The National Treasury clarified that the rand’s decline over the past decade was not caused by the Competition Tribunal’s case or the alleged manipulation of the rand. They emphasized that the manipulation only harmed individual clients and did not have a detrimental impact on South Africa as a whole. 

The Treasury asserted that the alleged collusion between 28 banks did not affect the rand’s exchange rate, highlighting the rand’s status as a free-floating market currency determined by the economy and international sentiment. 

Despite the rand’s 47% decline against the dollar in the past decade, the Treasury attributed it to concerns over crime, corruption, and economic stagnation. A weakened rand makes international imports more expensive but enhances the competitiveness of South African exports. 

The Treasury outlined plans to tighten regulation of financial markets, introducing legislation next year to broaden oversight of trading in over-the-counter derivatives and foreign currency.

The historical overview of the rand’s depreciation against the dollar reveals a complex interplay of factors. Key moments, including the 2015 State Capture and the 2020 pandemic, have significantly impacted the rand’s value. Geopolitical factors further contributed to the intricate dynamics affecting the currency. 

Additionally, the global moves and market fluctuations exerted substantial influence, collectively shaping the trajectory of the rand’s depreciation.

Amidst post-pandemic recovery efforts, South Africa grapples with persistent challenges, notably the ongoing electricity crisis. The country’s poor geopolitical positions contribute to the fluctuation of the rand’s value in global markets. Concurrently, global interest rate moves play a pivotal role in influencing currency fluctuations. 

According to Investec Chief Economist Annabel Bishop, the rand is expected to attempt breaking the R18.00/USD resistance level multiple times this year, with projections of running below R18.00/USD into the next year as the global interest rate hike cycle shifts to one of cuts.

Analyzing the exchange rates between the rand and the dollar provides insights into their dynamic relationship. The significance of rand-dollar dynamics is particularly pronounced in the context of potential manipulation, influencing trade and economic conditions. 

The current depreciation of the rand to dollar, with 1 ZAR equal to 0.054 USD, carries significant implications for the South African economy, impacting trade balances and economic stability.

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