UPDATE 1-Taiwan c.bank moves against speculators as currency soars

(Recasts, adds details)

TAIPEI, Jan 21 (Reuters) - Taiwan's central bank said on Thursday it would punish four unnamed foreign banks for helping grains firms speculate in the deliverable forwards foreign exchange market, as it moved to slow the Taiwan dollar's rise.

The Taiwan dollar is at a more than 23-year-high against the greenback as the island's trade-dependent economy booms on the back of global demand for its tech products.

The central bank has tried using "moral persuasion" to slow the currency surge, asking banks to exercise restraint in forex trade, but has been particularly concerned about the grains case.

In a statement, it said that starting from July 2019, eight grains trading companies ostensibly carrying out routine currency transactions for their business had in fact engaged in currency speculation, and as a result affected the stability of Taiwan's foreign exchange market.

It put the total value of the trades at $11 billion.

"Grains firms in Taiwan were massively involved in the trade of Taiwan dollar deliverable forwards in the name of trade, speculating in foreign currency," it said, without naming any companies.

The bank said that after probing six banks it concluded that the banks failed to check whether their clients had a "real need" to trade in Taiwan dollar deliverable forwards.

It said four of the banks, which it said were foreign banks but did not name, would be punished soon, and that licences to trade foreign currency may be revoked in the most serious cases.

The other two banks took the initiative to terminate related transactions with the grains firms before the probe, the central bank said, without elaborating whether they received any punishment. (Reporting by Liang-sa Loh and Yimou Lee; Writing by Ben Blanchard; Editing by Kevin Liffey and Raju Gopalakrishnan)

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