Economists are urging government to be careful in handling the matter regarding banks the Competition Commission accuses of colluding on price fixing and market allocation in foreign currency trading.
They pointed out that “destroying” the banking sector could cost South Africa investor confidence.
According to the commission, the alleged collusion has involved the rand since 2015.
“The government has to be very careful because one of the positives is the banking sector,” economist Azar Jammine said.
“If government destroys that, we could see difficulty with people who lose confidence in the banking sector.”
This would affect the economy, he said, adding that the one thing that has been positive in the country’s ratings was the banks.
President Jacob Zuma, during his reply to debate on the state of the nation address (Sona) on Thursday, touched on the issue in parliament.
“This matter is still under investigation … as stated in the Sona, government is prepared to act against market abuse, price-fixing and collusion in the private sector in order to protect our country’s economy.
“The Competition Commission can impose fines on companies but the impact is far-reaching, as it distorts our economic system.”
Jammine said the effects of the collusion, “while not at all clear”, meant ordinary people had been paying much more for foreign exchange, as have those transacting, buying or selling rands.
Economist Mike Schussler said it was also not known which way the manipulation occurred, abroad or locally.
“So we don’t know if it’s impacted on South African consumers. We will have to see what the court [Competition Tribunal] case will say … But this seems to be more on the margin and I don’t think it affects its customers that much.
“We have to be careful on how we handle it. The Competition Commission has to be a bit more careful with their statements – it’s not that SA consumers will be out-of-pocket … they may be in-pocket – we just don’t know. Let’s see what the next step is.”