Page 167 - SARB: 100-Year Journey

Adv. John Myburgh chaired the Rand Inquiry. /Myburgh Office
Dr Mandla Gantsho served as a commissioner during the Rand Inquiry. /SARB
It ran away because of international volatility and massive default in the international [capital] markets. That has been the beef of emerging markets for a very, very long time with major markets throughout the world.”
Major markets are home to huge trading houses such as banks, but their funds, which are big sources of capital for emerging markets, are housed offshore. The big markets make money out of volatility. “That in itself creates volatility,” Cross said.
“There was nothing we could do. We ... [were] part of every other country that got hammered. We got more hammered because our markets are very liquid,” Cross explained.
Adv. Myburgh was particularly nervous because the inquiry “... was going to be held in public. So it was going to be a very, very difficult commission. You wanted to find out what happened to the rand. Why it had dived. On the other hand, you didn’t want the rand to be affected by what was going to be aired in public.”
In 2001, the rand had plummeted from R7.60 to the US dollar in January to R13.84 in December, reaching an all-time low.
Said Gantsho: “There are two distinct periods of this decline to highlight. There was a period from January to around end-August, beginning- September, where the rand weakened quite significantly by about 10%. But on average about 1.3% per month. That was the first period. Then, the second period was from September to December, where the rand weakened by about 42% on average or about 10.5% per month. We had to understand, that was the problem which we were solving for. Or rather, that was the problem that we were looking at finding solutions for, and then we looked at the terms of reference.”
The outcomes and recommendations of the inquiry are detailed in a ‘Final Report of the Commission of Inquiry into the Rapid Depreciation of the Exchange Rate of the Rand and Related Matters’, published on 1 August 2002.
Governor Mboweni remains of the view that: “If there was one moment I could describe as my lowest as Governor, it was that Commission of Inquiry into the Depreciation of the Rand.”
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