The SACP has called on the government to charge banks involved in currency manipulation with economic sabotage.
They said fines imposed on the banks serve no purpose and they are a pittance.
They want government to take a tough line by charging banks for corruption as this conduct has serious implications for the economy.
The Competition Commission, National Treasury, the South African Reserve Bank and Financial Sector Conduct Authority appeared before the standing committee on finance where they gave details on action they would take to fight currency manipulation.
The SARB, National Treasury and FSCA said they were bringing in a new Bill and will also amend the Financial Markets Act to fight the rigging of the currency.
National Treasury and FSCA said the Conduct of Financial Institutions Bill will be tabled in Parliament soon.
The SACP said on Saturday the effects of currency rigging were felt through the increase of the cost of living.
It said rand manipulation was corruption and economic sabotage and should be treated as such.
The Competition Commission imposed a fine of R43 million against Standard Charted Bank, a British bank, for being involved in currency manipulation between 2007 and 2013.
It has agreed to give evidence against other banks, who are challenging the findings of the commission, who were involved in the scheme.
But the SACP said the fine was a pittance and they want stronger action because of the economic damage done by the banks.
“The damage caused by currency manipulation is long-lasting. While the Competition Commission is well versed in quantifying various impacts of currency manipulation, we must highlight a number of those impacts, which it must take into account. The impacts include economic, financial and national revenue losses, which occur mainly because of currency devaluation.
“Especially when a country’s currency is attacked, its sudden and significant depreciation immediately leads to imported goods, such as oil, becoming more expensive. This contributes to inflation, as the cost of goods and services rises, impacting the purchasing power of consumers, with greater impact on the workers and poor. Rising prices, along with high unemployment and poverty, are conducive conditions for political unrest,” said the SACP.
There were other serious implications when the currency depreciates and this includes the cost of servicing the national debt.
The government debt has increased exponentially in the last few years and was threatening to crowd out social expenditure.
The SACP also said depreciation of the currency leads to capital flight and destabilises the economy. It also makes imports expensive.
The ANC and EFF have also called for the prosecution of those involved in currency manipulation.
Politics