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Chinese yuan deposits fall to lowest in over 5 years

2019/10/19 16:28:21

Taipei, Oct. 19 (CNA) Chinese yuan deposits held by Taiwanese banks fell to the lowest level in more than five years at the end of September, ending two months of increases amid continued trade disputes between the United States and China, which placed downward pressure on the Chinese currency's value, according to the central bank.

Data compiled by the central bank showed the balance of yuan deposits at banks in Taiwan as of the end of September totaled 264.95 billion yuan (US$37.42 billion), down 1.46 billion yuan from the end of August.

The September figure was the lowest since February 2014, when the balance of yuan deposits held by Taiwanese banks stood at 247.05 billion yuan.

The central bank said the decline resulted from a move by institutional clients of the banks to cut yuan deposit balances, with some of them allocating funds to newly raised mutual funds in the month as alternative investment options.

In February 2013, when cross-strait financial exchanges were on the rise under the then-Kuomintang government, the central bank lifted its ban on the domestic banking units (DBUs) of local banks conducting yuan-denominated transactions.

Before the ban was lifted, only the 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 Taiwanese banks hit an all-time high of 338.22 billion yuan. However, after the balance fell below the 300 billion yuan mark at the end of 2018, the amount has mostly trended down and never returned to that level.

Despite the fall in overall yuan deposits at the end of September, yuan deposits in DBUs bucked the trend, rising 327 million from a month earlier to 233.05 billion, while the balance of OBUs fell 1.79 billion yuan from August to 31.91 billion yuan, the central bank said.

The central bank said the increase in the yuan deposit balance at DBUs was probably because investors pocketed funds due to the maturity of some yuan-denominated bonds or mutual funds. Although the yuan deposits in retail investors' were little changed in September, compared with August, they only accounted for about 30 percent of the entire deposit balance, compared with a peak of 50 percent in the past, the central bank said.

Meanwhile, yuan-denominated remittances in September totaled 117.15 billion yuan, down from 191.39 billion in August, with remittances through DBUs totaling 66.75 billion yuan, down from 91.34 billion yuan a month earlier, and those via OBUs reaching 50.40 billion, down from 100.05 billion yuan, according to the central bank.

In September, Sunny Bank offered 2.8 percent interest on one-year yuan deposits, and Jih Sun International Bank offered 2.45 percent on nine-month yuan deposits and Standard Chartered Bank offered 2.7 percent on six-month yuan deposits, the highest rates among local banks, the central bank said.

In addition, Mega International Commercial Bank offered interest of 2.4 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.

(By Pan Tzu-yu and Frances Huang)
Enditem/AW