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Chinese yuan deposits hit 22-month high

2017/12/16 16:48:27

Taipei, Dec. 16 (CNA) Chinese yuan deposits held by banks operating in Taiwan hit a 22 month high at the end of November, an indication of the increased faith local investors have in the Chinese currency, according to the central bank.

The central bank said the increase in the balance of yuan-denominated deposits in the local banking sector is the product of a stabilized Chinese currency moving in a narrow range after recent volatility.

The balance of yuan deposits received by Taiwanese banks, including negotiable certificates of deposit (NCDs), at the end of November totaled 317.88 billion yuan (US$48.09 billion), up 3.57 billion yuan or 1.14 percent from the end of October, data compiled by the central bank showed.

This is the seventh consecutive month the balance of yuan-denominated deposits has trended higher and the November figure is the highest since January 2016, when the balance stood at NT$318.99 billion yuan, the data indicated.

At the end of November, the yuan rose 0.56 percent against the U.S. dollar from a month earlier, stabilizing from its downturn earlier in the year. Compared with the beginning of this year, the yuan has fallen more than 4 percent against the greenback.

In February 2013, when cross-strait financial exchanges were on the rise under the China-friendly Kuomintang government, the central bank lifted a ban on local banks' domestic banking units (DBUs) conducting yuan-denominated transactions, including yuan deposits.

Before the ban was lifted, only the offshore banking units (OBUs) of Taiwanese banks were allowed to take yuan deposits and conduct other yuan transactions.

In June, 2015, the balance of yuan deposits taken by banks in Taiwan hit an all-time high of NT$338.22 billion.

Ho Pei-chen (賀培真), a specialist with the central bank said the increase in November's yuan deposits largely came from swelling deposits received by the banks' DBUs on the back of more yuan-denominated investments by institutional customers. Yuan deposits taken by banks' DBUs at the end of November rose 3.66 billion yuan from a month earlier to 286.75 billion yuan, but the balance held by banks' OBUs fell 90 million yuan from a month earlier to 31.13 billion, the central bank said.

Despite gains in November, Taiwan's yuan deposits still lag far behind that of Hong Kong, where the balance of yuan deposits hit 540.3 billion yuan at the end of October, up 4.8 billion yuan from a month earlier.

Meanwhile, yuan-denominated remittances in November totaled 107.43 billion yuan, up from 72.69 billion yuan in October, with remittances through banks' DBUs at 61.16 billion yuan and OBUs at 46.27 billion yuan, according to the central bank.

Ho said the increase in yuan-denominated remittances by DBUs could be largely attributed to rising demand for funds in bond investments by local life insurance companies and securities houses.

According to the central bank, many banks in Taiwan offered higher interest rates to attract yuan deposits in November, with Jih Sun International Bank offering 3.1 percent for one-month yuan deposits and 3.6 percent for three-month deposits, the highest level for the two types of time deposits among local banks.

In addition, Ta Chong Bank offered 3.8 percent for six-month yuan deposits, the highest level, while Jih Sun Bank offered 3.6 percent for nine-month deposits and Standard Chartered Bank offered 3.8 percent for one year deposits, also the highest local levels, the central bank said.

(By Chiu Po-sheng and Frances Huang)