Taipei, Nov. 16 (CNA) Chinese yuan deposits at Taiwan banks dropped at the end of October to the lowest amount in 17 months due mainly to the depreciation of the Chinese currency against the U.S. dollar, according to the central bank.
The balance of yuan deposits at Taiwanese banks, including negotiable certificates of deposit (NCDs), totaled 308.48 billion yuan (US$44.45 billion) as of the end of October, the lowest level since May 2017 when it was 308.28 billion, central bank data showed.
The October figure dropped by 2.23 percent, or 7.04 billion yuan, from a month earlier, the data indicated.
According to the central bank, the yuan fell in October by a monthly 1.24 percent against the U.S. dollar and dropped 4.91 percent year-on-year, which prompted many investors to move their funds out of yuan-denominated assets.
In February 2013, when cross-Taiwan Strait financial exchanges were on the rise under the pro-China 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 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.
At the end of October, yuan deposits at DBUs fell 7.92 billion yuan from a month earlier to about 272.80 billion yuan, while the balance at OBUs increased by 881 billion yuan to 35.68 billion yuan, the central bank said.
Ho Pei-chen (賀培真), a specialist at the central bank, said the decline in yuan deposits at DBUs was due largely to a reduction in such deposits, including time deposits, by enterprise clients.
Ho said the yuan also encountered volatility against the U.S. dollar amid trade tensions between the United States and China, dampening investors' interest in yuan holdings, which caused the balance to fall after four months of increase.
Meanwhile, yuan-denominated remittances in October totaled 138.11 billion yuan, up from 131.79 billion a month earlier, with remittances through DBUs totaling 68.61 billion yuan and via OBUs 69.50 billion, according to the central bank.
The increase in yuan remittances reflected mainly overseas purchases by companies in the local electronics and securities investment sectors, the central bank said.
In October, many banks in Taiwan were offering higher interest rates to attract yuan deposits, with Standard Chartered Bank offering 3.8 percent on one-year yuan deposits and Jih Sun International Bank offering 3.6 percent on nine-month deposits, the highest rates among the local banks, the central bank said.
In addition, Jih Sun Bank interest rates were 3.6 percent on six-month yuan deposits and 3.0 percent on one-month yuan time deposits, highest rates in October, the central bank said.
As for three-month time deposits, Bank of Taiwan had the highest interest rate of 3.3 percent, according to the central bank.