DBS, Standard Chartered Said to Face Chinese Currency Curbs

Updated on
  • DBS ban from some FX business said to be shorter than 3 months
  • Standard Chartered said to have appealed to shorten hiatus

DBS Group Holdings Ltd. and Standard Chartered Plc are among banks suspended from some foreign-exchange business in China, according to people with knowledge of the matter.

Standard Chartered has appealed to China’s central bank to shorten a ban imposed in December and running through March, said one of the people, who asked not to be identified because they’re not authorized to speak publicly. DBS’s ban is shorter than three months, another person said.

China may be trying to curb excessive speculation as the the yuan weakens, Wai Ho Leong, senior regional economist at Barclays Plc in Singapore, said in an interview. 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 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.

New Tools

The central bank is considering new tools to limit volatility, people familiar with the matter said on Thursday. These include measures to limit arbitrage between the currency’s onshore and offshore rates and speculative trades, especially involving foreign companies’ deals.

Suspensions on settling offshore clients’ yuan transactions in the onshore market were imposed last month by the People’s Bank of China, people familiar with the matter have 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.

China’s decision to suspend Standard Chartered was reported earlier by Reuters, which also cited Deutsche Bank AG among lenders banned. All three banks declined to comment.

Standard Chartered’s shares fell 4.2 percent as of 1:32 p.m. in Hong Kong, where the benchmark Hang Seng Index dropped 2.4 percent. In Singapore, DBS was down 1.9 percent.