Mon, Jan 25, 2010 - Page 12 News List

Financial firms to receive ‘reminder’ on forwards

BASIC RULESAs a flood of funds is expected in Taiwan, the monetary authority said that it would sit down with trading companies to remind them about regulationsA


The central bank will meet financial firms today to dicuss rules for foreign-­exchange forwards rules, central bank Deputy-Governor George Chou (周阿定) said.

“There will be training to remind them about the rules,” Chou said of the meeting by telephone on Friday. “Every now and then, some banks break the rules.”

Filings on forex trading will also be on the agenda, he said.

The New Taiwan dollar dropped 0.2 percent to NT$31.980 against its US counterpart on Friday on speculation the central bank would intervene to cap gains after the currency reached its strongest level this month since September 2008.

The local currency was down 0.5 percent against the greenback last tweek, the biggest loss since July 10.

“The foreign-exchange market has been normal recently,” Chou said.

Forwards are agreements to buy and sell assets at current prices for future delivery.

Foreign-exchange forward trading must be based on actual demand and brokers must have supporting documents from customers, the central bank said on its Web site.

Warming trade and investment ties with China have led to a flood of funds into Taiwan from abroad. Investors based abroad pumped NT$57.9 billion (US$1.8 billion) this year into shares on the main bourse, the Taiwanese Stock Exchange Web site showed.

The monetary authority highlighted the benefits of capital controls on Jan. 12. It said on Thursday that the nation’s exchange-rate policy would have to consider the economy and would not meet the needs of different sectors.

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