TAIPEI (Taiwan News) — The Central Bank has identified individuals suspected of engaging in currency speculation after an investigation was launched following the sharp appreciation of the Taiwan dollar in early May.
Currency speculation involves buying and selling currencies to profit from fluctuations in exchange rates. The Taiwan dollar surged by over NT$1 against the US dollar over two consecutive days, raising concerns about speculative activity in the foreign exchange market.
In its investigation, the Central Bank discovered that certain companies and individuals had disguised foreign loans as a means to bring funds into Taiwan, converting them into Taiwan dollars without legitimate use. Authorities found that some of these funds were parked in Taiwan dollar demand deposit accounts rather than being immediately invested in domestic securities as declared in the remittance nature, per CNA.
Central Bank Governor Yang Chin-long (楊金龍) addressed the issue in the legislature on Thursday, emphasizing the bank’s commitment to swiftly addressing any signs of speculative behavior. He outlined lessons learned from this situation and reaffirmed the bank’s dedication to maintaining order in the foreign exchange market.
The Central Bank began special financial inspections on Wednesday and continued efforts on Thursday to curb speculation. It urged banks to ensure compliance with exchange regulations when processing currency transactions.
The Central Bank stated that foreign capital inflows should be used for declared investments in domestic securities, not preemptively transferred before such purchases. It stressed that banks must verify the relevance and necessity of documents and cash flows when handling large Taiwan dollar foreign exchange transactions.
Additionally, the Central Bank reminded banks to fully understand their clients' transaction needs when processing foreign exchange transactions under the guise of foreign loans. Banks must ensure foreign loans are retained in foreign currency unless there is a legitimate need for Taiwan dollars.
