Trade implications of the South African Exchange Control Regulations and Article 8 (2)(b) of the IMF Agreement

Abstract

This paper provides a legal analysis of certain provisions of the South African Exchange Control Regulations and Article VIII (2) of the IMF Agreement. In particular, the paper investigates the meanings of the terms 'foreign exchange' and 'exchange contracts' in the South African Regulations and Article VIII (2) of the IMF Agreement, respectively. The paper argues that the interpretations of these terms should be confined to transactions primarily concerned with the exchange of currency of states. Transactions in which money is merely exchanged for goods, commodities, or merchandise should be excluded from the broad and trade inhibiting interpretation of the terms. Supported by Booysen, a prominent South African scholar in this branch of law, the narrow interpretation of the term exchange contracts is probably the most correct for South Africa and one that may be emulated in interpreting the phrase foreign exchange in the South African Exchange Control Regulations.