STUART GRAHAM, Johannesburg | Wednesday
BoE BANK was not involved in any transactions that could have affected the rand’s value in 2001, the commission investigating the currency’s decline last year heard on Wednesday.
Executive director of treasury and finance at the bank, David Woollam, said the only types of transactions that the bank was involved in that had the potential to influence the foreign exchange markets were currency spot and currency forward transactions with corporate and retail clients.
”However, I do not believe that the bank’s foreign exchange dealings, either proprietary or on behalf of our clients, are of such a volume and magnitude that they could affect the rand,” Woollam said.
”The bank also does not generate any material flows from other transactions that could influence the foreign currency market.”
Woollam said the rand’s slide in the last quarter of 2001 did not have an adverse impact on the bank’s liquidity.
”Moderate losses were made during November and early December within treasury as a consequence of being long-rand against the dollar.”
He said the bank remained an active facilitator of their client’s spot and forward transactions and the volatile currency movements did not have any impact on the bank’s operational stability. Factors that influenced the currency were according to Woollam:
— September 11,
— the Argentinian debt crisis and its impact on market perceptions of the economies of developing nations,
— the Zimbabwe land invasions,
— the uncertainty created by an SA Reserve Bank circular on October 14, where investors believed that there would be a reintroduction of exchange controls,
— exporters holding back on repatriating their dollar earnings, and
— the lack of liquidity due to the withdrawal of certain market makers.
Head of treasury operations for BoE, Gordon Little, told the commission that all the bank’s activities were governed by the group’s code of ethics.
To his knowledge there were no breaches of the code from January 1 to December 31, 2001.
”As head of treasury operations and being responsible for market risks within the treasury and exchange control compliance, I am able to confirm on behalf of the bank that it is unaware of any illegal or unethical transactions, during the period under investigation, which may have contributed to or given rise to the rapid depreciation of the rand,” Little said.
The commission, headed by Advocate John Myburgh, was established by President Thabo Mbeki after her received information from various sources that dubious forces contributed to the rand’s 37% slide in 2001.
The rand reached record lows against most of the currencies in the slide, including R13,85 to the US dollar.
It has however stabilised and by late Wednesday morning was trading around R11,20 to the US dollar. – Sapa