Cargill Inc and Deutsche Bank AG are among a group of major foreign companies under investigation in Taiwan for allegedly speculating on the surging local currency last year, hindering the central bank’s efforts to rein in a rampant foreign-exchange market.
Eight of Asia’s leading food traders, with the help of six overseas banks, built a combined US$11 billion in their New Taiwan dollar deliverable forwards positions as of the end of July last year, the central bank said in a statement last week.
Cargill and Louis Dreyfus Co were involved, along with Deutsche Bank, Citigroup Inc, JPMorgan Chase & Co and Standard Chartered PLC, said people with knowledge of the matter, who asked not to be identified because they are not authorized to speak publicly.
Photo: Chen Mei-ying, Taipei Times
ING Groep NV and Australia & New Zealand Banking Group are also being investigated, a person familiar with the situation said.
The positions were based on overseas physical grain trades deliberately transacted via their Taiwan units to speculate on the local currency, affecting market stability, the central bank said.
The companies, which the central bank has not identified, had ceased the trades by the end of July last year.
The central bank is to announce punishments for four of the banks soon.
It has already settled with two other lenders.
The monetary authority cannot sanction the grain firms, but it is preparing to hand over detailed information about the case to other government agencies, such as the Ministry of Finance and the Financial Supervisory Commission, to allow them to investigate further.
At least some of the trades were specifically designed to profit from the rising NT dollar, the sources said, presenting a direct challenge to the central bank as it battled to contain a rapidly rising currency in its efforts to maintain a stable financial environment for the export-dependent economy.
The central bank last week said that the huge positions the commodity companies built up in deliverable forwards went beyond their actual business needs.
None of the commodity trades behind the forward positions, nor the principle parties involved, were in Taiwan, it said.
“Speculation is typically frowned upon by the central bank, as it could destabilize markets and distort pricing,” Malayan Banking Bhd senior currency strategist Christopher Wong (黃經隆) said in a message.
“The punishment aims to send a deterrence message and the central bank can use this as a means of ‘reminding the markets’ not to be a menace,” Wong said.
The NT dollar strengthened more than 6 percent in the 12 months leading up to July 31 last year, the biggest gain among Asian currencies.
It has continued to appreciate since then, triggering ongoing interventions that the central bank Governor Yang Chin-long (楊金龍) says are merely intended to “smooth” the gains to maintain financial stability.
The US last month responded by putting Taiwan back onto its watchlist of potential currency manipulators and urging the central bank to allow the NT dollar to appreciate further.
NATIONAL SECURITY THREAT: An official said that Guan Guan’s comments had gone beyond the threshold of free speech, as she advocated for the destruction of the ROC China-born media influencer Guan Guan’s (關關) residency permit has been revoked for repeatedly posting pro-China content that threatens national security, the National Immigration Agency said yesterday. Guan Guan has said many controversial things in her videos posted to Douyin (抖音), including “the red flag will soon be painted all over Taiwan” and “Taiwan is an inseparable part of China,” while expressing hope for expedited “reunification.” The agency received multiple reports alleging that Guan Guan had advocated for armed reunification last year. After investigating, the agency last month issued a notice requiring her to appear and account for her actions. Guan Guan appeared as required,
Japan and the Philippines yesterday signed a defense pact that would allow the tax-free provision of ammunition, fuel, food and other necessities when their forces stage joint training to boost deterrence against China’s growing aggression in the region and to bolster their preparation for natural disasters. Japan has faced increasing political, trade and security tensions with China, which was angered by Japanese Prime Minister Sanae Takaichi’s remark that a Chinese attack on Taiwan would be a survival-threatening situation for Japan, triggering a military response. Japan and the Philippines have also had separate territorial conflicts with Beijing in the East and South China
A strong cold air mass is expected to arrive tonight, bringing a change in weather and a drop in temperature, the Central Weather Administration (CWA) said. The coldest time would be early on Thursday morning, with temperatures in some areas dipping as low as 8°C, it said. Daytime highs yesterday were 22°C to 24°C in northern and eastern Taiwan, and about 25°C to 28°C in the central and southern regions, it said. However, nighttime lows would dip to about 15°C to 16°C in central and northern Taiwan as well as the northeast, and 17°C to 19°C elsewhere, it said. Tropical Storm Nokaen, currently
PAPERS, PLEASE: The gang exploited the high value of the passports, selling them at inflated prices to Chinese buyers, who would treat them as ‘invisibility cloaks’ The Yilan District Court has handed four members of a syndicate prison terms ranging from one year and two months to two years and two months for their involvement in a scheme to purchase Taiwanese passports and resell them abroad at a massive markup. A Chinese human smuggling syndicate purchased Taiwanese passports through local criminal networks, exploiting the passports’ visa-free travel privileges to turn a profit of more than 20 times the original price, the court said. Such criminal organizations enable people to impersonate Taiwanese when entering and exiting Taiwan and other countries, undermining social order and the credibility of the nation’s
RSS