Banks: The Vultures Feasting on Chaos

Manipulation of the Rand-Dollar Exchange Rate Led by Standard Chartered Plunges a Faltering South Africa into the Abyss.

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Introduction

The financial arena of South Africa has been rocked by a startling revelation. Banks, once pillars of fiscal integrity, stand accused of gross manipulation, distorting the US dollar’s value against the South African rand.

This treachery has plunged an already fragile economy into further despair.

The Banks Mechanics of Manipulation

These banks resorted to cunning strategies to manipulate the exchange rate:

  • Front-running: Executing trades ahead of substantial client orders, exploiting ensuing price shifts.
  • Wash trading: Simulating trading momentum by concurrently buying and selling currencies, thus swaying market rates.
  • Price collusion: Collaborating with other banks to fix exchange rates, stifling competition, and sustaining inflated prices.

Catastrophic Economic Impact

The repercussions of this manipulation have been devastating:

  • Heightened Volatility: The artificially bolstered dollar contributed to the rand’s instability, hindering business planning.
  • Escalating Import Costs: A stronger dollar heightened import expenses, straining both businesses and consumers.
  • Diminished Export Competitiveness: A devalued rand has undercut South Africa’s competitiveness in global markets.

The economic damage is substantial, with the nation suffering massive financial losses in the order of tens of billions, if not hundreds, due to the overvalued dollar.

Standard Chartered gets slapped with a meagre R47 million fine.

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South African Reserve Banks Countermeasures

In response, the South African Reserve Bank (SARB) has apparently implemented stringent measures:

  • Tougher Regulations: Reinforced forex trading rules and penalties for non-compliance.
  • Intensified Surveillance: Advanced monitoring of forex activities to detect and investigate suspect trading patterns.
  • Augmented Transparency: Greater openness in forex market operations to promote transparency.

However, it’s the same SARB that could not act against a South African President that holds cash in foreign currency.

SARB will most likely ignore this magnanimous act of corruption, and move on.

Involvement of Local Banks

The inquiry, by the Competition Commission, identified numerous local banks in these manipulative practices, though their names remain undisclosed.

There are only a handful, guess and you will most likely be correct!

However, information from a trusted source indicate Nedbank, FNB and ABSA.

Do you have more accurate information on who the culprits are? Please share.

My Final Thoughts

This scandal has not only wreaked economic havoc but also eroded faith in the banking system. The SARB’s actions, while vital, need to be part of a larger, relentless effort to cleanse the financial system of corruption.

South Africans deserve a transparent, ethical financial system, not one marred by the predatory greed of a few. The government must act decisively to restore integrity and justice in the financial sector.

Why Virtual Adviser?

As a trusted and leading financial adviser, Virtual Adviser is committed to uncovering the truth for the benefit of our clients. Our in-depth analyses and investigative reports, like the one on South African banks’ manipulation of the rand-dollar exchange rate, demonstrate our unwavering dedication to providing transparent and accurate financial insights.

At Virtual Adviser, we navigate the complexities of the financial world to bring clarity and understanding to our clients, ensuring they are always informed and ahead of the curve.

Jitesh Jairam