Sep 18, 2019 General Comments Off on Chinese yuan deposits up at end-August, despite depreciation
Taipei-Chinese yuan deposits held by banks operating in Taiwan at the end of August moved higher for the second consecutive month, although the Chinese currency weakened against the U.S. dollar amid continued trade tension between the United States and China, according to the local central bank.
The central bank said the increase in the balance of yuan deposits at banks in Taiwan as of the end of August came after investors appeared reluctant to exit the market but were still willing to wait for a possible rebound from the Chinese currency's weakness.
Data compiled by the central bank showed the balance of yuan deposits in Taiwan banks at the end of August stood at 266.41 billion yuan (US$37.58 billion), up 1.089 billion yuan from a month earlier.
Before the yuan rose against the greenback for the second straight month in August, the Chinese currency fell to the lowest level of 265.16 billion yuan at the end of August since February 2014, when the balance stood at 247.05 billion yuan amid concerns over the Washington-Beijing trade dispute.
In August, the yuan fell to 7.16 yuan against the U.S. dollar, down 3.64 percent from a month earlier, marking the steepest month-on-month decline in 25 years.
However, Chen Wan-ning (???), a specialist in the central bank's Foreign Exchange Department, told reporters that many local institutional investors, in particular life insurance companies and securities investment trust firms, received yuan-denominated funds after some yuan-denominated bond funds in which they had invested matured.
The amount these institutional investors received from their bond investments totaled about 800 million yuan but they decided to park the funds in their yuan deposit accounts as they found it was not a good time to sell their yuan.
In February 2013, when cross-Taiwan Strait financial exchanges were on the rise under the then-Kuomintang government, the central bank lifted its ban on domestic banking units (DBUs) of local banks conducting yuan-denominated transactions.
Before the ban was lifted, only offshore banking units (OBUs) of Taiwanese banks were allowed to accept yuan deposits or conduct other yuan transactions.
In June 2015, the balance of yuan deposits at banks in Taiwan hit an all-time high of 338.22 billion yuan.
According to the central bank, at the end of August, yuan deposits in DBUs rose 133 million yuan from a month earlier to 232.72 billion, while the balance of OBUs also grew 956 million yuan to about 33.70 billion, the central bank said.
Meanwhile, yuan-denominated remittances in August totaled 191.39 billion yuan, with remittances through DBUs totaling 91.34 billion yuan, up from 67.57 billion yuan a month earlier, and those via OBUs reaching 100.05 billion, up from 57.57 billion yuan, according to the central bank.
Chen said the spike in yuan remittances in August reflected an increase in fund allocations by Taiwanese electronics companies to China, while the maturity of yuan-denominated mutual funds also boosted the currency's remittances.
In August, Sunny Bank offered 2.8 percent interest on one-year yuan deposits in August, and Jih Sun International Bank offered 2.55 percent on nine-month yuan deposits and Shanghai Commercial & Savings Bank offered 2.78 percent on six-month yuan deposits, the highest rates among local banks, the central bank said.
In addition, KGI Bank offered interest of 2.5 percent on three-month yuan deposits and CitiBank Taiwan paid interest of 2.5 percent on one-month yuan deposits, the highest for those products during the month, the central bank added.
Source: Focus Taiwan News Channel
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