Serving Africa’s FX Clients: Richard De Roos, Standard Bank

Richard de Roos, global head of foreign exchange, Standard Bank, says a deep understanding of client needs comes over time, with continuous engagement and constant feedback.

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Global Finance: What are the main features ofStandard Bank’s upgraded single-dealer platform, eMarketTrader?

Richard de Roos: The product has continually evolved since its release in 2013 as we gained an increasingly deeper understanding of our clients’ needs. Over the last 12 months, we added many new features, some offering increased transactional capabilities and others improving the overall usability. We have a completely new user interface designed from the ground up so we have two “skins” for eMarketTrader: a professional one and a simpler, natural language, which allows our clients more flexibility in how they deal with foreign exchange. On transactions, we have added the ability for clients to execute netted block trades and flexible forwards and have enhanced our orders offering. We recently launched a reporting capability, which our clients see as a huge focus for 2016.

GF: Ideally,what shouldsingle-dealer platforms (SDPs) offer clients, and how do youmatch technology to their needs?

De Roos: We believe that one reason you get variances in SDP capabilities across the globe is that banks must deliver what their clients, in their markets, need, so there is no generic, ideal list of capabilities. Given our footprint and expertise in Africa, the list of what we should offer will undoubtedly be different from that of a regional bank outside this continent. It’s through the constant engagement and feedback loops we have created across clients, sales, product and technology that we can further deepen our understanding of our clients and deliver capabilities that are right for them.

GF: What’s the outlook for FX in Africa in 2016?

De Roos: For many commodity-exporting African countries, the decline in oil and other commodity prices will weigh on economies and currencies in 2016. Although some African currencies are free-floating, many are administered under fixed-exchange-rate regimes. In the wake of the commodity price slump, we have seen an aggressive response by central banks imposing an array of regulatory hurdles to reduce FX demand. Barring the Zambian kwacha, many of Africa’s commodity exporters—oil exporters in particular—haven’t seen their currencies depreciate much over the last 18 months. Among oil exporters, the Angolan kwanza has been the worst performer, depreciating by nearly 30% since June 2014. So we expect further devaluation in these currencies. For commodity importers, the picture is mixed. Kenya and Uganda saw a sharp depreciation of their currencies: Their central banks responded by tightening monetary policy, lifting Treasury bill rates to well over 20%. These currencies are now stabilizing, due partly to portfolio inflows attracted by high interest rates. The outlook is for modest depreciation well within the path implied by FX forward rates, or even modest appreciation over the coming year. Countries using the CFA franc will naturally follow the euro.

GF: How about South Africa?

De Roos: Further currency weakness. Despite South Africa having the largest industrial base in Africa, the rand remains a commodity currency. South Africa faces relatively wide twin deficits (fiscal and current-account) compared to its peers, as well as low growth. In order to fund the deficits, South Africa relies heavily on external portfolio flows, but this is a time when sentiment towards emerging market, and commodity producers in particular, is not favorable.