Taiwanese banks face funding hit on renminbi-linked Tarfs

Regulator warns banks on structured currency trades as renminbi hits 18-month lows


International dealers fear Taiwanese banks are facing potentially huge US dollar funding needs tied to the depreciating Chinese renminbi – a result of back-to-back target redemption forward (Tarf) trades with international dealers.

"There is a lot of interest in this – from the top of the bank there's been interest in finding out what is going on," says Adam Gilmour, head of Asia-Pacific currency and derivatives sales at Citi in Singapore.

The trades have also caught the attention of Taiwan's Fi