The Hong Kong-listed arm of China International Trust and Investment Corp (Citic) China's largest state-owned investment group, had committed itself to large purchases of Australian dollars and euros on the assumption that the two currencies would continue to appreciate against the US dollar.

After the opposite trend emerged this summer, Citic Pacific found itself saddled with losses of US$1.88bn at current mark-to-market prices. That is more than three times the US$560m the company booked in profit for the first six months of this year. Yesterday, Citic Pacific's shares fell 55 per cent to HK$6.52, meaning the estimated forex losses now exceed the company's market capitalisation.

With the US dollar strengthening dramatically since the onset of the global financial crisis, Citic Pacific's losses could widen even further. The company must mark-to-market for reporting purposes on December 31. Nor will its problems end with the new year. Citic Pacific is contracted to buy more than A$9bn through October 2010.