Small Exchange: HSBC fined millions for negligence, Aussie banks’ high exchange fees and Egypt’s forex reserves skyrocket

Peter Terlato 3 October 2017

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This week's currency news rounded up.

HSBC fined $175 million for negligence

As the trial against former HSBC executive Mark Johnson gets underway, the Federal Reserve announced it has fined the British-based bank $175 million for its inability to detect illicit foreign-exchange practices.

Johnson and another HSBC executive are accused of carrying out a $3.5 billion currency manipulation scheme. The bank was fined after failing to identify the alleged misuse of confidential customer information and the trader's engagement in prohibited online chat-room discussions with competitors regarding trading positions.

The Federal Reserve also ordered HSBC to improve its risk management system for foreign-exchange trading.

Fox Business reports other regulators also imposed financial penalties and reformative action upon HSBC over similar activities during 2008 and 2013 but none had referenced the two alleged criminal traders.

Since the unmasking of the prolific, decade-long forex scandal in 2013, many banks have endured prosecution.

Research finds Aussie banks charge some of the highest exchange fees

A new research study, commissioned by Transferwise, has found Australia's Big Four banks are reportedly charging customers billions in hidden foreign exchange fees, up to 30 times more than in other countries.

Recently, Australia's leading financial institutions decided to scrap ATM fees for both bank and non-bank customers, potentially exposing losses of up to $500 million per year. However, Transferwise's research suggests this figure doesn't even come close to the amount profited by exuberant exchange rate mark-ups.

The report said the banks charge around $75 for a $1000 transfer to a US bank. An additional study conducted by The Australian found forex mark-ups by the Big Four have increased fivefold to between 4-5% since 2008.

Comparatively, Transferwise charges around $7 in fees for the same $1000 transfer to a US bank account.

Belarus eases up on foreign exchange charges for exporters

In an attempt to liberalize its currency and enhance export potential, the National Bank of Belarus has decided to reduce the amount of foreign currency required to be surrendered by local exporters on its forex market.

Belarus's central bank cut the foreign exchange indemnity charges from 20% to 10%, effective 1 October 2017.

Egypt forex reserves reach record levels

The Central Bank of Egypt's foreign exchange reserves peaked at a record high US$36.5 billion in September.

The bank reports forex reserves rose US$391 million month-on-month between August and September 2017.

Egypt's foreign exchange reserves have risen by more than US$21 billion since July 2016, up more than 135.7%.

Each week Small Exchange sums up currency news from around the globe and looks into how it impacts exchange rates and options.

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