Namibia’s economy would likely feel the impact of the rand manipulation through changes in trade dynamics, exchange rates, inflation and the need for policy adjustments to address economic challenges.
The Bank of Namibia (BoN) says the manipulation of the rand by 28 South African banks between 2007 and 2013 impacts Namibia indirectly through the Namibia dollar-rand peg.
“The manipulation can potentially interfere with monetary policy implementation, as the impacts are transmitted through the inflation passthrough channel, albeit indirectly in the case of Namibia,” BoN spokesperson Kazembire Zemburuka says.
South African media reported that Standard Chartered, a British bank, acknowledged responsibility last week for engaging in a scheme to manipulate the rand-US dollar exchange rate from 2007 to 2013. They agreed to a fine of N$43 million.
This scheme, involving around N$1 trillion in daily trades during that period, involves 28 banks, including Standard Bank, Nedbank and FirstRand, which have significant operations in Namibia.
Standard Chartered’s settlement follows a 2017 agreement with Citibank regarding similar allegations of misconduct.
“The manipulation of any currency often allows the perpetrators the opportunity to harvest unfair profits to the detriment of the citizens, public and corporate sectors,” Kazembire says.
Kazembire highlighted that currency manipulation not only disrupts the regular operations of currency markets, but also adds an additional layer of complexity to forecasting foreign exchange movements.
This complexity, he said, poses challenges for businesses in terms of planning and executing trade strategies.
Kazembire said the authorities are taking strong measures against and penalising financial institutions that were involved in such malpractices and the loopholes that gave rise to such malpractices have been closed.
“The BoN believes it is such swift actions that will continue to maintain and restore public confidence in the functioning of the currency markets and the financial sector as a whole,” Kazembire says.
Meanwhile, according to EyeWitness News, South Africa’s minister in the presidency Khumbudzo Ntshavheni says the incidence of rand manipulation serves as a reminder that the country’s private sector lacks a commitment to the nation’s development.
“That is why they also self-feed into the narrative that there’s a collapsing state, there is a collapsing economy, because that is what they wish for and their actions do that, but despite those efforts, the South African economy continues to be resilient,” the news outlet quoted Ntshavheni saying.
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