THE Central Bank of Lesotho (CBL) has warned the public against investing in foreign currency businesses (forex trading), saying they risk losing their money to illegal forex traders.
In a recent statement, the CBL said that forex traders were operating illegally as none of them had been issued with licences by the apex bank.
The CBL also directed all forex traders to immediately stop their operations.
“As the commissioner of financial institutions, the Central Bank of Lesotho advises the public that there are persons and companies who take deposits from the public with the purpose of trading in foreign currencies on behalf of the public and on the promise that they will get lucrative returns on their deposits within a certain period.
“The public is warned that these individuals and companies are operating without licenses from the Central Bank of Lesotho. The Central Bank therefore advises the public to desist from giving such persons or companies any monies under the impression of making an investment.
“The public is informed that participation in any activities related to the acquisition, trading or use of financial securities is at the user’s sole risk. In the event of any losses resulting from participation in these forex trading activities, there shall not be any recourse to the Central Bank of Lesotho.
“The Central Bank of Lesotho directs any person or company that is collecting money from the public for forex trading activities to cease doing so with immediate effect,” the CBL said in the statement.
Meanwhile, the Consumers Protection Association (CPA) has welcomed the warning by CBL, saying consumers should exercise caution when deciding to invest their money in any investment vehicles.
The CPA however, said the statement had come too late when many people had already lost money to the forex traders.
“While the (CBL) statement has good intentions, it has come too late when some consumers have already lost money in these investments. The CBL is reactive instead of being proactive before these schemes even enter the market,” said Nkareng Letsie, the executive director of the CPA.
He said forex trading was no different from other forms of gambling, where one could either win or lose money. Mr Letsie further added it is better for people to trade in forex on their own instead of engaging third parties as this increased the likelihood of being cheated of their money.
He said the poor state of the economy resulted in high levels of unemployment and in their desperation to make money, some of the jobless people turned to the illegal forex traders where there were high chances of losing even the little money they had.
He said the CBL should expedite the operationalisation of the Maseru Securities Market which has been dormant since its establishment in 2016.
He further added that only wealthy investors could afford to invest in the available legal investment instruments such as government bonds and treasury bills.