The Financial Supervisory Commission (FSC) yesterday said that exposure to derivatives linked to yuan volatility has continued to decline as the Chinese currency fell to a new six-year low of 6.7 yuan against the US dollar.
In terms of total notional amounts and refundable deposits against client defaults, domestic banks’ exposure to yuan-linked target redemption forward (TRF) and double knock-outs (DKO) have continued to decline in the first eight months of this year, the commission said.
As of the end of August, the outstanding notional amount of TRF was NT$30.6 billion (US$967,960), down from NT$37 billion at the end of the first quarter, with the figure continuing to trend lower to NT$35.4 billion at the end of the first half, the commission said.
Total refundable deposits for TRF and DKO on a mark to market basis have fallen to NT$34.3 billion, compared with NT$100 billion at the end of last year and NT$34.2 billion and NT$42.7 billion at the end of the first and second quarter this year respectively, the commission said.
At the same time, banks have raised their provision against TRF defaults to NT$10.6 billion as of the end of August, with the figure jumping from NT$8.8 billion and NT$4.27 billion at the end of March and June respectively.
The commission said that the yuan-linked derivatives weathered a crisis in early January, when the yuan fell as low as 6.5 against the greenback, and that the markets would be more resilient against the latest bout of volatility.
Amid ongoing negotiations between investors and banks regarding settlement of massive losses triggered by the yuan’s weakening in the past two years, a local media report published yesterday pointed to another flareup as a local medium-sized industrial company has racked up as much as NT$20 billion in TRF-related losses.
“We found the amount listed in the report to be unlikely, and our investigation into the matter with banks did not uncover a company fitting the description,” an FSC official who declined to be identified said.
Regarding questions of whether clients were not fully informed of the derivative’s risks, the commission has ordered banks and affected investors who are in talks to move forward with the settlement timetable and begin either arbitration or mediation with third party institutions to two weeks.
The majority of larger-sized businesses utilize TRF as part of their foreign-exchange risk hedging strategy, but continued fallout from the troubled instrument has made the option less viable, leading to higher hedging costs, the official said.
He added that while many businesses view themselves as victims who were misled by banks, most are willing to shoulder their losses and preserve long-running relations with their lenders.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last