Top
Image Alt

The Investing Box

  /  Cryptocurrency   /  Taiwan probes foreign banks over grain firms’ arbitrage

Taiwan probes foreign banks over grain firms’ arbitrage

imageForex7 hours ago (Aug 11, 2020 10:50PM ET)

(C) Reuters. A man is seen reflected next of the Taiwan’s Central Bank logo in Taipei

TAIPEI (Reuters) – Taiwan’s central bank is investigating the actions of five foreign banks for their involvement in some $8 billion in net trading positions on the deliverable forwards market, four sources with knowledge of the situation told Reuters.

The central bank on Tuesday met the banks to discuss the situation with them, the sources said, speaking on condition of anonymity as they were not authorised to speak to the media.

The banks had been engaged by grains firms to trade dollars in the offshore non-deliverable forwards (NDF) market where they would get a better exchange rate than they would at home, the sources said.

The sources declined to identify the banks or the grains firms. The central bank did not respond to a request for comment.

Taiwan does not permit onshore trading of NDFs, but companies can still engage in this via foreign banks’ overseas branches.

The sources said the size of the trades could have an impact on the Taiwan dollar exchange rate at a time when the central bank is already worried about the local currency’s strength.

The Taiwan dollar has continued to strengthen against the U.S. dollar, and the relatively large gap between the overseas non-deliverable forward market for the greenback and the deliverable forward market for the Taiwan dollar has created arbitrage opportunities, as they get a more favourable rate overseas.

The Taiwan dollar has appreciated 2.4% against the greenback so far this year, worrying the government in the export reliant economy. Taipei is also wary about being labelled a currency manipulator by the United States.

Taiwan probes foreign banks over grain firms’ arbitrage

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Post a Comment