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.
GEARING UP: An invasion would be difficult and would strain China’s forces, but it has conducted large-scale training supporting an invasion scenario, the report said China increased its military pressure on Taiwan last year and took other steps in preparation for a potential invasion, an annual report published by the US Department of Defense on Wednesday showed. “Throughout 2023, Beijing continued to erode longstanding norms in and around Taiwan by employing a range of pressure tactics against Taiwan,” the report said, which is titled “Military and Security Developments Involving the People’s Republic of China (PRC) 2024.” The Chinese People’s Liberation Army (PLA) “is preparing for a contingency to unify Taiwan with the PRC by force, if perceived as necessary by Beijing, while simultaneously deterring, delaying or denying
‘ONE BRIDGE’: The US president-elect met with Akie Abe on Dec. 15 in Florida and the two discussed a potential Taiwan-China conflict’s implications for world peace US president-elect Donald Trump has described Taiwan as “a major issue for world peace” during a meeting with Akie Abe, the widow of late Japanese prime minister Shinzo Abe, Japanese newspaper the Yomiuri Shimbun quoted sources as saying in a report yesterday. Trump met with Akie Abe on Dec. 15 at the Mar-a-Lago estate in Florida, where the two discussed the Russo-Ukrainian war and the situation in the Taiwan Strait. During the meeting, Trump spoke on the implications for world peace of a potential Taiwan-China conflict, which “indicated his administration’s stance of placing importance on dealing with the situation in
QUICK LOOK: The amendments include stricter recall requirements and Constitutional Court procedures, as well as a big increase in local governments’ budgets Portions of controversial amendments to tighten requirements for recalling officials and Constitutional Court procedures were passed by opposition lawmakers yesterday following clashes between lawmakers in the morning, as Democratic Progressive Party (DPP) members tried to block Chinese Nationalist Party (KMT) legislators from entering the chamber. Parts of the Public Officials Election and Recall Act (公職人員選舉罷免法) and Constitutional Court Procedure Act (憲法訴訟法) passed the third reading yesterday. The legislature was still voting on various amendments to the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) as of press time last night, after the session was extended to midnight. Amendments to Article 4
ALLIANCE: Washington continues to implement its policy of normalizing arms sales to Taiwan and helps enhance its defense, the Ministry of Foreign Affairs said US President Joe Biden on Friday agreed to provide US$571.3 million in defense support for Taiwan, the White House said, while the US State Department approved the potential sale of US$265 million in military equipment. Biden had delegated to the secretary of state the authority “to direct the drawdown of up to US$571.3 million in defense articles and services of the Department of Defense, and military education and training, to provide assistance to Taiwan,” the White House said in a statement. However, it did not provide specific details about this latest package, which was the third of its kind to
RSS