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Taiwan Curbs Banks’ Holdings of Derivatives

Taiwan’s central bank said it will step up curbs on the use of exchange-rate derivatives to combat currency speculation by foreigners.

Banks’ holdings of non-deliverable forwards and options in the Taiwan dollar will be limited to 20 percent of their positions in the local currency with immediate effect, the central bank said in an e-mailed statement late yesterday. The ceiling was previously one-third. Deliverable forwards are exempt from the restrictions as they are used by local companies to protect earnings against exchange-rate fluctuations, it said.