Banks in Singapore have unearthed evidence that traders conspired to manipulate rates in the offshore foreign exchange market, Reuters reported, in a story which if confirmed, adds to the recent interbank-fixing scandal that has rocked banks such as Barclays and UBS.

The newswire quoted an unnamed source. 

"In line with the investigation into LIBOR, regulators in several jurisdictions are looking into how key market interest rate benchmarks have been set by banks.  In July 2012, the Monetary Authority of Singapore (MAS) directed banks that are on the Association of Banks in Singapore (ABS) rates setting panels, including UBS, to comprehensively review their rate setting processes," the MAS told this publication in an emailed statement, referring to the recent affair of banks fiddling the London Interbank Offered Rate system.

"The banks have to immediately report any irregularities they uncover to MAS, and have to take appropriate disciplinary action against staff involved in such irregularities.  The reviews are ongoing, and it is premature to speculate on the outcome of these reviews at this stage," it said.

Banks’ investigations found evidence showing that traders from several banks communicated with each other over electronic messaging about what rates they were going to submit for the local banking association's fixings for non-deliverable foreign exchange forwards, aiming to benefit their trading books, Reuters said.

"Traders were talking to traders, saying: 'I need you to help me today, I need to fix low,'" the newswire quoted the source as saying.

NDFs are derivatives that let companies and investors hedge or speculate on emerging market currencies when exchange controls – as exist in much of Asia - make it difficult for foreigners to participate directly in the spot market. Contracts are settled in dollars, so there is no exchange of the underlying currency, but they can affect spot exchange rates.

The timing of the report is potentially significant as the Asia-Pacific market has witnessed rapid growth recently in foreign exchange activity related to the growth of an offshore market for renminbi-based products.

Singapore’s MAS ordered banks that help set local interbank lending rates and NDF rates to review the fixing process last year, the report said, at the same time that US and UK regulators cracked down on manipulation of the London interbank offered rate. Barclays has been fined $450 million and UBS $1.5 billion. In the case of Barclays, the scandal led to the resignation of high-profile executive Bob Diamond.