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.
COMBINING FORCES: The 66th Marine Brigade would support the 202nd Military Police Command in its defense of Taipei against ‘decapitation strikes,’ a source said The Marine Corps has deployed more than 100 soldiers and officers of the 66th Marine Brigade to Taipei International Airport (Songshan airport) as part of an effort to bolster defenses around the capital, a source with knowledge of the matter said yesterday. Two weeks ago, a military source said that the Ministry of National Defense ordered the Marine Corps to increase soldier deployments in the Taipei area. The 66th Marine Brigade has been tasked with protecting key areas in Taipei, with the 202nd Military Police Command also continuing to defend the capital. That came after a 2017 decision by the ministry to station
‘INVESTMENT’: Rubio and Arevalo said they discussed the value of democracy, and Rubio thanked the president for Guatemala’s strong diplomatic relationship with Taiwan Guatemalan President Bernardo Arevalo met with US Secretary of State Marco Rubio in Guatemala City on Wednesday where they signed a deal for Guatemala to accept migrants deported from the US, while Rubio commended Guatemala for its support for Taiwan and said the US would do all it can to facilitate greater Taiwanese investment in Guatemala. Under the migrant agreement announced by Arevalo, the deportees would be returned to their home countries at US expense. It is the second deportation deal that Rubio has reached during a Central America trip that has been focused mainly on immigration. Arevalo said his
‘SOVEREIGN AI’: As of Nov. 19 last year, Taiwan was globally ranked No. 11 for having computing power of 103 petaflops. The governments wants to achieve 1,200 by 2029 The government would intensify efforts to bolster its “Sovereign Artificial Intelligence [AI]” program by setting a goal of elevating the nation’s collective computing power in the public and private sectors to 1,200 peta floating points per second (petaflops) by 2029, the Executive Yuan said yesterday. The goal was set to fulfill President William Lai’s (賴清德) vision of turning Taiwan into an “AI island.” Sovereign AI refers to a nation’s capabilities to produce AI using its own infrastructure, data, workforce and business networks. One petaflop allows 1 trillion calculations per second. As of Nov. 19 last year, Taiwan was globally ranked No. 11 for
Israel yesterday said it has begun preparations for the departure of large numbers of Palestinians from the Gaza Strip in line with US President Donald Trump’s plan for the territory, while Egypt has launched a diplomatic blitz behind the scenes to try and head off the plan. The Trump administration has already dialed back aspects of the proposal after it was widely rejected internationally, saying the relocation of Palestinians would be temporary. US officials have provided few details about how or when the plan would be carried out. Trump yesterday said that Israel would turn Gaza over to the US after the
RSS