Icap glitch showing sinking yuan fuels jitters

BEIJING • Yuan investors - already nervous about US President-elect Donald Trump's focus on China's currency policy - got a shock yesterday when Icap data incorrectly showed the currency sinking to 7.5 per US dollar.

The decline showed up on Google and Xe.com, causing a stir on Twitter. United Kingdom-based markets operator Icap's prices had the dollar-yuan at about 7.5 yesterday 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 Mr Peter Chia, a foreign exchange strategist at United Overseas Bank in Singapore.

"I've seen websites display faraway 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. At the broker level, the trades are orderly."

The official exchange rate rose less than 0.1 per cent to 6.8779 per US dollar as of 4.49pm in Shanghai, China Foreign Exchange Trade System prices show. The yuan traded in Hong Kong's overseas market fell 0.2 per cent, according to prices compiled by Bloomberg.

The yuan has come under increased pressure after Mr 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 per cent against the greenback this quarter and recently traded at an eight-year low as his win boosted the outlook for US inflation amid persistent Chinese capital outflows.

Icap vendor screens also displayed inaccurate data, the company said. Google Inc has a bug in the system and it is fixing the problem, said a person familiar with the matter. No one at Xe.com replied to an e-mail seeking comment. The People's Bank of China did not 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 US$1.5 trillion (S$2.1 trillion) exiting since the beginning of last year, said Bloomberg Intelligence estimates - spurring tougher measures by the Chinese Communist Party to curb outflows.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on December 07, 2016, with the headline 'Icap glitch showing sinking yuan fuels jitters'. Print Edition | Subscribe