Refco, Inc., one of the world’s largest futures and currency brokerages, announced yesterday that it was forced to freeze customer withdrawals in order to continue to operate. Apparently, Refco holds significant margined USD positions on behalf of certain clients, which it funds through other accountholders’ unused funds. For unknown reasons, Refco suddenly became unable to sustain its margin positions and has placed a moratorium on withdrawals in order to remain liquid. According to certain forex traders, this placed acute pressure on the USD, which was already ‘overstretched.’ Bloomberg News reports:

Refco’s moratorium on withdrawals trapped its customers in holdings of dollar assets. At the same time, the firm’s own positions in dollar assets may be in trouble, and the combination made dollar trading more difficult.

Read More: Dollar Erases Gains as Traders Say Refco Freeze Forces Selling