Tai­wan’s cen­tral bank finds ‘un­usual trad­ing strate­gies’

The Pak Banker - - Front Page -

TAIPEI: Tai­wan's cen­tral bank said on Wed­nes­day it had found "un­usual trad­ing strate­gies" dur­ing in­spec­tions of banks' for­eign ex­change op­er­a­tions, and will seek an in­ves­ti­ga­tion, in its lat­est clam­p­down on what it sees as desta­bil­is­ing "hot money".

The bank had launched the in­spec­tions two days af­ter tight­en­ing lim­its on trad­ing in non-de­liv­er­able for­wards (NDFs), the lat­est in a se­ries of mea­sures as it grap­ples with a Tai­wan dol­lar that has risen to 13-year highs.

The cen­tral bank has waged a run­ning bat­tle for most of this year against surges in the do­mes­tic cur­rency, prompted by con­cerns that a strong Tai­wan dol­lar could desta­bilise the ex­port-de­pen­dent econ­omy and cre­ate as­set bub­bles.

In a state­ment late on Wed­nes­day, it said "a small num­ber of au­tho­rized for­eign ex­change banks have tar­geted spe­cific times of the day to sell off large quan­ti­ties of for­eign ex­change, in­cit­ing panic and dis­or­der in the for­eign ex­change mar­ket".

The cen­tral bank said it had spo­ken to the heads of two banks and asked reg­u­la­tors for an in­ves­ti­ga­tion into the rea­sons be­hind the "un­usual" trad­ing strat­egy. It did not name the banks.

"Our in­quiry has re­vealed that the fund­ing for these trans­ac­tions orig­i­nates ex­clu­sively from the in­ward re­mit­tance made by cer­tain for­eign in­vestors," it said, adding that the probe will seek the fi­nal ben­e­fi­cia­ries be­hind those in­vestors. For­eign cap­i­tal in­flows to Asia have risen sharply this year, at­tracted by bet­ter growth prospects and po­ten­tial re­turns than in ma­jor de­vel­oped economies, spark­ing de­fen­sive mea­sures in many economies fear­ful of the volatil­ity such flows bring.

Tai­wan's cen­tral bank has long been among the most hawk­ish in fight­ing spec­u­la­tion, and has a track record of mak­ing ad­just­ments to reg­u­la­tions and seek­ing in­for­ma­tion from banks as a way of ex­ert­ing pres­sure and re­mind­ing banks of its pres­ence. It had ear­lier this year con­ducted in­spec­tions of five or six banks' cur­rency for­wards busi­nesses, but has stopped short of mea­sures such as taxes on spec­u­la­tive money.

An of­fi­cial of the cen­tral bank's for­eign ex­change di­vi­sion said later on Wed­nes­day that the two bank chiefs had been called in "for a cup of cof­fee", and had promised to rem­edy the is­sue. The of­fi­cial, who did not want his name to be used, said he did not see the need to talk to other banks at present.

It said in a state­ment ear­lier on Wed­nes­day that the cen­tral bank had sought "to un­der­stand the bank's for­eign ex­change trad­ing sit­u­a­tion but had found noth­ing out of the or­di­nary." A dealer at a for­eign bank in Taipei said the in­spec­tions will sim­ply mean that banks will be even more punc­til­ious in their daily re­ports on trad­ing to the cen­tral bank. -PB News

IS­LAM­ABAD: Ah­mad Farhan Hamid, Vice Chair­man of the Peo­ple’s Con­sul­ta­tive Assem­bly of Re­pub­lic of In­done­sia called on the Chair­man Se­nate Fa­rooq H. Naek at Par­lia­ment House. -App

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