Date
22 July 2017
China has suspended some of the foreign exchange business of DBS and Standard Chartered since last month. Photos: Bloomberg
China has suspended some of the foreign exchange business of DBS and Standard Chartered since last month. Photos: Bloomberg

DBS, StanChart banned from some forex business in China

DBS Group Holdings Ltd. and Standard Chartered plc (02888.HK) are among several foreign banks suspended from some foreign-exchange business in China, Bloomberg reported Thursday, citing unnamed sources.

StanChart has appealed to China’s central bank to shorten a ban imposed from December until the end of March, the report said. DBS’s ban is shorter than three months.

China may be trying to curb excessive speculation as the the yuan weakens, Leong Wai Ho, senior regional economist at Barclays plc in Singapore, told Bloomberg.

He cited signs of disorderly moves as offshore yuan rates diverged markedly from the currency’s daily fixing.

That volatility was on show on Thursday: the offshore yuan swung from a 0.3 percent gain to a 0.7 percent loss against the US dollar and then back within about 30 minutes.

By early afternoon, it had strengthened the most in two months. Onshore, the currency had tumbled to a five-year low.

The People’s Bank of China is considering new tools to limit volatility, the report said.

These include measures to limit arbitrage between the currency’s onshore and offshore rates and speculative trades, especially involving foreign companies’ deals.

The central bank imposed suspensions last month on settling offshore clients’ yuan transactions in the onshore market, the report said.

The clampdown came as the growing offshore-onshore spread made it profitable to buy the currency in Hong Kong and sell it in Shanghai.

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