ICAP Glitch Showing Yuan Plunging 8.8% Fuels Trader Jitters

  • Inaccurate third party data caused erroneous pricing: ICAP
  • CFETS data show onshore spot rate rose amid weakening dollar

Yuan investors -- already nervous about Donald Trump’s focus on China’s currency policy -- got a shock Tuesday when ICAP Plc data incorrectly showed the currency sinking to 7.5 per dollar.

Google pricing showed yuan at 7.48 per dollar.

Source: Google

The decline showed up on Google and Xe.com, causing a stir on Twitter. ICAP’s prices had the dollar-yuan at about 7.5 Tuesday even before the spot market started trading in Shanghai. The error was caused by an inaccurate third party feed, ICAP said in a statement, adding it has removed that party from its data sources.
“Those are bum quotes and I don’t think we should accord any credibility" to them, said Peter Chia, a foreign-exchange strategist at United Overseas Bank Ltd. in Singapore. "I’ve seen websites display far away figures before, usually on the weekends when the feed is stale. I’m a bit surprised that those price levels are still lingering on ICAP. On the broker level, the trades are orderly.”

Xe.com showed wild move in yuan.

Source: Xe.com

The official exchange rate rose less than 0.1 percent to 6.8779 a dollar as of 4:49 p.m. in Shanghai, China Foreign Exchange Trade System prices show. The yuan traded in Hong Kong’s overseas market fell 0.2 percent, according to prices compiled by Bloomberg.

The yuan has come under increased pressure after Trump’s victory, with the Republican threatening to brand China a currency manipulator for allowing the exchange rate to weaken. The currency has tumbled 3 percent against the greenback this quarter and recently traded at an eight-year low as Trump’s win boosted the outlook for U.S. inflation and amid persistent Chinese capital outflows.

ICAP vendor screens also displayed inaccurate data, the company said. Google Inc. has a bug in the system and the company is fixing the problem, according to a person familiar with the matter. No one at Xe.com replied to an e-mail seeking comment. The People’s Bank of China didn’t immediately respond to a faxed request for comment.

ICAP data available on the Bloomberg terminal continued to show extreme moves in China’s currency through much of the Asian day, with the rate oscillating between 7.48 and 6.87. The company said it publishes data derived from both internal sources and "several" third party feeds, adding that vendor screens were quoting in the 7.47 to 7.48 range when the correct market rate was in the 6.86 to 6.87 range.

Investors have been wary of sudden yuan moves after a one-off devaluation last year and a series of weaker fixings in January roiled global financial markets. The falling currency has also prompted Chinese to shift money overseas -- with about $1.5 trillion exiting the nation since the beginning of 2015, according to Bloomberg Intelligence estimates -- spurring tougher measures by the Communist Party to curb outflows. Data due Wednesday will probably show the country’s foreign-exchange reserves dropped some $60 billion last month from October, according to a Bloomberg survey of analysts.

Before it's here, it's on the Bloomberg Terminal.