Small Exchange: Manipulation in South Africa, Nigeria’s forex review and Chinese property

Peter Terlato 20 February 2017 NEWS

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The week's currency news rounded up.

Accusations surface of South African currency manipulation

The Competition Commission of South Africa (CompCom SA) has accused both domestic and international banking institutions of rigging the price of South Africa's currency, the rand.

The BBC reports that 17 banks, including Barclays, JP Morgan and HSBC, will likely face prosecution over the alleged manipulation, some of which dates back to 2007.

CompCom SA says banks used online chat forums to arrange fake bids and offers in an effort to control the market. The competition watchdog suggests that the banks be fined 10% of their in-country annual turnover.

A number of institutions have already agreed to cooperate with authorities.

Nigeria's economic council calls for review of forex policy

Driven by a continuously widening gap between inter-bank foreign exchange and parallel market rates, Nigeria's National Economic Council (NEC) has requested an immediate review of the current foreign exchange policy by the country's central bank.

Prior to the introduction of the flexible foreign exchange policy in June 2016, the exchange rate for the naira remained within a band of NGN197 and NGN199 to the dollar, according to the Premium Times.

The removal of this band, aimed at boosting the supply of the naira and propping up a weakened economy, actually restricted government control.

Nigeria's foreign exchange reserves climbed to $29 billion last week, the highest level in 19 months but nowhere near the peak of $64 billion in August 2008.

China's foreign property investments take a tumble

In an effort to restrict outgoing capital, the Chinese government has been tightening the rules that govern foreign currency exchange since January.

The Financial Times reports that these restrictions have culled the flow of foreign acquisitions, forcing foreign property investment by Chinese companies down by 84% last month.

The dramatic decrease comes after a substantial rise in foreign real estate investment last year to a record US$33 billion, according to data from global real estate firm JLL.

Following a 39% drop in December, total non-financial outbound investment fell by 36% in January year-on-year to US$7.8 billion, according to China's commerce ministry.

Each week Small Exchange sums up currency news from around the globe and looks at how it impacts exchange rates and options.

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