Taiwan punishes Deutsche Bank, others in currency speculation case

Taiwan’s central bank said on Sunday it had banned Deutsche Bank from trading Taiwan dollar deliverable and non-deliverable forwards and
suspended it for two years from trading forex derivatives as part of a crackdown on speculation. The Taiwan dollar is at its highest in more than 23 years against the US dollar as the island’s trade-dependent economy booms on global demand for its tech products fuelled by people working from home.

The central bank has been particularly concerned about a case where it said foreign banks helped grain companies engage in currency speculation through deliverable forwards, affecting the stability of Taiwan’s foreign exchange market. Sources told Reuters on Friday that the central bank had sent letters outlining punishments to Deutsche Bank, Citigroup Inc, ING and Australia and New Zealand Banking Group Ltd (ANZ) for their involvement.

Apart from the punishment for Deutsche Bank’s Taipei branch, the central bank said in statement that ING and ANZ’s Taipei offices would not be allowed to trade Taiwan dollar deliverable and non-deliverable forwards for nine months. Citi’s Taipei office would be suspended from trading Taiwan dollar deliverable forwards for two months, it added.

A Deutsche Bank spokesperson said: “We are working closely with the CBC and our clients to ensure that FX transactions involving the Taiwan Dollar have a genuine underlying need, and remain committed to playing a constructive role in the ongoing development of Taiwan’s capital markets. “Citi and ANZ declined to comment. Representatives for ING did not respond to a request for comment.

The punishments will come into effect on Monday, the central bank said. Eugene Tsai, head of the central bank’s foreign exchange department, told Reuters that transactions made by the banks in accordance with the rules before Friday had been completed on schedule. He added that the punishment against Deutsche meant it would not be able to trade forex options or swaps.

The central bank announced its probe into the case last month, which it said involved eight grain-trading companies.

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