TAIPEI (Reuters) – Taiwan’s central bank said on Sunday that it had banned Deutsche Bank from trading forward contracts in Taiwanese and undelivered dollars and suspended for two years from trading foreign exchange derivatives as part of a crackdown on speculation.
The Taiwanese dollar has been rising for more than 23 years against the US dollar, with the island’s economy dependent on trade growing with global demand for its technology products, as people work from home. The central bank is particularly concerned about a case in which it said that foreign banks helped grain companies to engage in monetary speculation through term deliveries, affecting the stability of Taiwan’s foreign exchange market.
Sources told Reuters on Friday that the central bank sent letters describing punishments to Deutsche Bank, CitigroupInc, ING and Australia and New Zealand Banking Group Ltd (ANZ) for their involvement.
In addition to the punishment for the Deutsche Bank branch in Taipei, the central bank said in a statement that the offices of ING and ANZ in Taipei would not be allowed to trade forward in Taiwanese dollars and would not be delivered for nine months.
Citi’s Taipei office will be suspended from negotiating Taiwanese dollar futures contracts for two months, he added.
Citi and ANZ declined to comment. Representatives from the other two banks did not immediately respond to a request for comment.
The punishments will take effect on Monday, the central bank added.
Eugene Tsai, head of the central bank’s foreign exchange department, told Reuters that transactions made by banks according to the rules before Friday were completed on schedule.
He added that the punishment against Deutsche means that he will not be able to trade foreign exchange options or swaps.
The central bank announced its investigation into the case last month, which it said involved eight grain trading companies.
Reporting by Liang-sa Loh and Ben Blanchard; Edition by Christian Schmollinger and Kim Coghill