Post by sapuco on Nov 7, 2010 7:09:57 GMT 4
Nov 5 (Reuters) - South Korea on Friday kept up the rhetoric on its efforts to minimise the impact from dollar inflows after the U.S. central bank unleashed a fresh asset buying plan, despite criticism from emerging market countries.
The host of next week's G20 summit will expand its inspection of foreign exchange derivative trades by banks to include more institutions, two of the country's top financial authorities jointly said in a joint statement.
The Bank of Korea and the Financial Supervisory Service (FSS) have just added Citibank Korea, a unit of Citigroup (C.N), and HSBC's (HSBA.L) Korean branch, to their inspection list, on top of eight other banks. The inspections are due from Nov. 15 to 23.
Sources said the branches of DBS (DBSM.SI), Morgan Stanley (MS.N), BNP Paribas (BNPP.PA) and JP Morgan (JPM.N) and Korea Exchange Bank (004940.KS), have either been inspected or were being inspected for their currency derivative trades.
For the three other banks -- Bank of America (BAC.N) and Australia and New Zealand Bank (ANZ.AX) and Shinhan Bank, the authorities have yet to start inspections.
The checks are related to the currency controls announced in June that were linked to short-term foreign debt. [ID:nTOE65C00R] The measures took effect in October after a three-month grace period.
But the regulatory move is separate from the expected steps aimed at curbing inflows into South Korea, which analysts said might be the reintroduction of withholding taxes on foreign bond holdings, further limits on forward FX positions at foreign bank branches or taxations on short-term offshore borrowing.
On Thursday, the finance ministry said in a statement the government would "aggressively" consider taking measures to curb fund inflows, and the central bank in a separate report called for efforts to contain excessive inward foreign portfolio investment.
The joint statement by the Bank of Korea and the FSS came hours after a regulatory official said that the country was closely watching "improper" foreign exchange positions aimed at taking advantage of the strengthening won.
He said the country planned to impose heavy punishment on banks found breaking regulations covering forward trading.
The won KRW= gave up most of its earlier gains to trade at 1,107.2 against the dollar as of 0532 GMT, weighed down by the regulatory concern.
Treasury futures' December contract KTBc1 extended its decline by 0.18 points after the joint statement.
The host of next week's G20 summit will expand its inspection of foreign exchange derivative trades by banks to include more institutions, two of the country's top financial authorities jointly said in a joint statement.
The Bank of Korea and the Financial Supervisory Service (FSS) have just added Citibank Korea, a unit of Citigroup (C.N), and HSBC's (HSBA.L) Korean branch, to their inspection list, on top of eight other banks. The inspections are due from Nov. 15 to 23.
Sources said the branches of DBS (DBSM.SI), Morgan Stanley (MS.N), BNP Paribas (BNPP.PA) and JP Morgan (JPM.N) and Korea Exchange Bank (004940.KS), have either been inspected or were being inspected for their currency derivative trades.
For the three other banks -- Bank of America (BAC.N) and Australia and New Zealand Bank (ANZ.AX) and Shinhan Bank, the authorities have yet to start inspections.
The checks are related to the currency controls announced in June that were linked to short-term foreign debt. [ID:nTOE65C00R] The measures took effect in October after a three-month grace period.
But the regulatory move is separate from the expected steps aimed at curbing inflows into South Korea, which analysts said might be the reintroduction of withholding taxes on foreign bond holdings, further limits on forward FX positions at foreign bank branches or taxations on short-term offshore borrowing.
On Thursday, the finance ministry said in a statement the government would "aggressively" consider taking measures to curb fund inflows, and the central bank in a separate report called for efforts to contain excessive inward foreign portfolio investment.
The joint statement by the Bank of Korea and the FSS came hours after a regulatory official said that the country was closely watching "improper" foreign exchange positions aimed at taking advantage of the strengthening won.
He said the country planned to impose heavy punishment on banks found breaking regulations covering forward trading.
The won KRW= gave up most of its earlier gains to trade at 1,107.2 against the dollar as of 0532 GMT, weighed down by the regulatory concern.
Treasury futures' December contract KTBc1 extended its decline by 0.18 points after the joint statement.