The central bank yesterday punished four foreign banks for helping grain merchants speculate in New Taiwan dollar-deliverable forwards in contravention of foreign-exchange regulations.
In a statement issued on its Web site, the central bank said it has revoked the Deutsche Bank Taipei branch’s licenses to trade NT dollar deliverable forwards and NT dollar non deliverable forwards.
The branch has also been banned from foreign-exchange derivatives transactions for two years, the statement said.
Photo: CNA
The central bank has banned the Taipei branches of ING Bank NV and Australia & New Zealand Banking Group Ltd from trading NT dollar deliverable forwards and NT dollar non deliverable forwards for nine months, it said.
Citibank Taiwan Ltd (花旗台灣銀行) has been suspended from NT dollar deliverable forward transactions for two months, it added.
The central bank said it on Friday notified the banks about the punishments, which are to take effect today.
The penalties came after the central bank said on Jan. 21 that eight grain merchants had engaged in currency speculation totaling US$11 billion since July 2019 with the help of branches and subsidiaries of six foreign lenders.
The activities were carried out under the guise of routine currency transactions, which were not in sync with their actual business needs, but affected the stability of the nation’s foreign-exchange market, the central bank said at that time.
“The branches and subsidiaries of six foreign banks in Taiwan have violated the related regulations on NT dollar deliverable forwards, but two of them stopped the questionable practices before the central bank’s special investigation,” yesterday’s statement said.
The central bank said it settled the case with the two unidentified lenders in November last year, as they had voluntarily stopped the questionable transactions and settled the unexpired positions soon after learning about the abnormality in the merchants’ financial reports and business situation.
Amid massive capital inflows, the NT dollar appreciated 5.6 percent against the US dollar last year. So far this year, the local currency has risen 0.41 percent against the greenback, but it has repeatedly challenged a 23-year high of NT$28 during intraday trading, the central bank’s data showed.
The central bank had opened the probe last year as part of its efforts to crack down on currency speculation amid rapid appreciation of the NT dollar.
It also asked custodian banks to exercise restraint in trades through moral persuasion and in a Facebook post urged the parties to maintain stable exchange rates.
The central bank’s latest effort to curb foreign-exchange speculation was announced on Wednesday, when it said it plans to revise foreign-exchange rules and cap foreign-currency settlements at US$50 million for companies and US$500,000 for individuals per year.
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