Business News of 2014-03-18

‘Banks can’t collude to fix forex rates’

The Head of Trading and Treasury Execution at Barclays Bank Ghana, Mr Kobla Nyaletey, has dismissed concerns that commercial banks in the country could, in the near future, collude to fix the rates at which foreign currency are exchanged with the cedi.

He explained that the BoG, which regulated the local financial market, was too alert on operations in the industry and the foreign exchange (FX) market in particular, thus, making it nearly impossible for banks to indulge in such an unethical behaviour.

Mr Nyaletey made the disclosure at a special training programme on financial reporting for selected business and economic journalists in Accra on March 14.

The one-day training was the initiative of the Institute of Financial and Economic Journalists (IFEJ), a grouping of business and financial journalists, with support from the Ghana Association of Bankers (GAB).

The GAB is the umbrella body of banks in the country. It was founded in 1989 as a conduit between the various banks and regulatory authorities, as well as serve as an advocacy institution for members.

The training centered on the interpretation of financial reports of companies and the implications of BoG's February 4 directives on the FX market.

The programme was to, among other things, sharpen the reporting and interpretation skills of journalists, while exposing them to the impact of the Central Bank's latest moves on the FX market.

The resource persons were drawn from the BoG and the commercial banks, while the participants, numbering about 20, were from the various the print, broadcast and online media houses in the country.

Taking the participants through operations on the interbank FX market, Mr Nyaletey explained the BoG had tighten regulations around the market in anticipation of misconduct.

"I tell you, there is no way banks in Ghana can collude to fix rates. The BoG guys are very alert on these things. Their requirements; submission of information on a daily basis and things like that make it very difficult for a bank to want to fix rates. If you do, the system will detect it and you will be in trouble," Mr Nyaletey, who has over 10 years experience in the forex trading business, said at the training.

His comments on the possibility of forex rate fixing came on the wake of renewed attempts by the Central Bank to develop the FX market by encouraging all the 27 banks onto the interbank forex market to trade forex.

Trading on the interbank market was, until recently, being dominated by Barclays Bank, Standard Chartered Bank and Stanbic as the rest of the commercial banks shieded away from trading.

The BoG is, however, seeking to correct that dormancy on the part of some of those banks.

That move, according to the Deputy Head of Financial Stability Department at the BoG, Dr Settor Amediku, was part of efforts aimed at developing the local FX market.

He explained that although forex trading was a permissible act among the various commercial banks, majority of them were yet to fully undertake any serious FX trading in the country.

"But we are now trying to cure that so that we can develop the market," Dr Amediku, who was also at the training programme, later told the GRAPHIC BUSINESS.

That attempt by the Central Bank to develop the market has, meanwhile, raised fears that situation in the United Kingdom, where Barclays Bank was penalised regulators for intentionally fixing FX rate could occur in the country.

However, genuine such concerns may be, Mr Nyaletey and Dr Settor said there are measures in place to prevent such an occurrence.

"We are fully alert and we don't expect something like that. We track their operations on a daily basis and if we realise any abnormally, we request for information and if we detect something fishy, then we quickly apply the sanctions spelt out on the foreign exchange act," Dr Settor said.

The said act made it ossicle for the bank to surcharge, as well as revoke the license of banks that violated the act.