Currency trading 101: How did banks manipulate currency

Competition Commission has referred a collusion case to the Competition Tribunal for prosecution against 17 banks, including three of South Africa's big banks, Absa, Standard Bank and Investec.

The Commission has been investigating a case of price fixing and market allocation in the trading of foreign currency involving the rand and dollar since April 2015.

How does currency trading work? How can one collude? What are the consequences on the economy?

Eusebius McKaiser finds out from Rand Swiss portfolio manager and market commentator, Gary Booysen, and Financial Mail deputy editor, Rob Rose.

Listen to the full interview below for more information and scroll down for quotes from parts of it...

Rand Swiss portfolio manager and market commentator, Gary Booysen,

Financial Mail deputy editor, Rob Rose,

What's forex trading?

Essentially, currency trading is taking one currency and converting it to another currency.

Gary Booysen, Rand Swiss portfolio manager and market commentator

Why do banks trade currency with each other?

Booysen says there are many reasons why banks practice currency, one being helping importers and exporters.

Banks would help customers either hitch positions if you are an import and export and want to create a contract to try and fix your price of currency, but to say I need a Rand/Dollar exchange at this level because I'm going to import these many cars from Korea and I need to fix the price so that I can plan my budgeting.

Gary Booysen, Rand Swiss portfolio manager and market commentator

What are the banks accused of?

Rose explains that there are many ways banks allegedly colluded, and here is one reason.

They colluded to say let's all offer our clients this amount of spread. If you are in a competitive market, and a client comes to you and says I want to change this and rate and spread is bad, a client will go to another bank. But if the other banks agrees to keep their rates to the same level, it manipulates supply and demand, and actually value client gets.

Rob Rose, Financial Mail deputy editor

This article first appeared on 702 : Currency trading 101: How did banks manipulate currency


Recommended

by NEWSROOM AI
Read More
Gauteng ANC throws weight behind Gordhan, questions Molefe's appointment

Gauteng ANC throws weight behind Gordhan, questions Molefe's appointment

ANCYL wants Finance Minister Pravin Gordhan fired following bank collusion scandal.

The closing of Oakbay's bank accounts proves collusion by the banks - Maphatsoe

The closing of Oakbay's bank accounts proves collusion by the banks - Maphatsoe

Maphatsoe says there should be a harsher punishment for 17 international and local banks who colluded to manipulate currency trades

ANCYL calling for Pravin Gordhan to go (just days before budget)

ANCYL calling for Pravin Gordhan to go (just days before budget)

EWN Reporter Clement Manyathela reports that the ANC Youth league want the current finance minister 'redeployed' out of Treasury.

Bank collusion may have made rand stronger - financial analyst

Bank collusion may have made rand stronger - financial analyst

Intellidex financial analyst, Stuart Theobald, says it's difficult to measure the impact of currency manipulation by 17 banks.

Treasury labels bank's collusion as "unbridled greed"

Treasury labels bank's collusion as "unbridled greed"

17 banks, accused of collusion and insider trading could be fined 10% of their revenue should they be found guilty.

Alleged bank collusion may have increased volatility of rand - economist

Alleged bank collusion may have increased volatility of rand - economist

Currency traders from across the world reportedly used many platforms to distort the market in a case of bank collusion.

Timing of bank collusion case can't be ignored-  political analyst

Timing of bank collusion case can't be ignored- political analyst

Competition Tribunal to investigate 17 major banks for currency manipulation, at a time when Gupta family was in the spotlight.

Popular articles
[LISTEN] New Visa regulations could change the face of South African tourism

[LISTEN] New Visa regulations could change the face of South African tourism

Lecturer at TUT's Dept of Tourism, Unathi Henama says that the tourism sector is at the center of the economic policies in SA.

'My hubby is 75 and we still do it' - stories about sex on the other side of 50

'My hubby is 75 and we still do it' - stories about sex on the other side of 50

Is biology putting the brakes on your sexuality? Callers share their experiences of sex and growing older.

'Some weed plants with high levels of chemicals have been linked to psychosis'

'Some weed plants with high levels of chemicals have been linked to psychosis'

Naked Scientist, Chris Smith shares his insights on some of the risks associated with smoking marijuana.

[Watch] Dad breaks down when reunited with car sold to pay wife’s bills

[Watch] Dad breaks down when reunited with car sold to pay wife’s bills

Khabazela shares some of the most popular tweets, posts, and videos on 'What's gone viral'.

DStv Premium on a downward spiral, warns tech guru

DStv Premium on a downward spiral, warns tech guru

DStv has lost about 140 000 Premium subscribers to Netflix over the past two years, tech expert Arthur Goldstuck.

Hits from the bong (it’s legal!)… then off to work I go?

Hits from the bong (it’s legal!)… then off to work I go?

The consequences of consuming dagga at home and showing up at the office high. Bruce Whitfield interviews a labour lawyer.

17-year-old learner killed teacher for not allowing him to jump the food queue

17-year-old learner killed teacher for not allowing him to jump the food queue

Spokesperson for Education department says the fact that this learner is still in Grade 10 at 17 may indicate there is a problem.

3 emergency numbers you should have on speed dial and how they work

3 emergency numbers you should have on speed dial and how they work

These are the emergency numbers you should have on your cellphone and this is what you must understand about how they work.