Taipei, July 15 (CNA) Chinese yuan deposits held by banks operating in Taiwan fell to the lowest level in 64 months at the end of June as banks lowered interest rates, making the currency less attractive to investors, the central bank said Monday.
Despite a stronger yuan against the U.S. dollar in June, data compiled by the central bank showed the balance of yuan deposits at banks in Taiwan as of the end of the month, including negotiable certificates of deposit, totaled 265.16 billion yuan (US$38.60 billion), down 3.12 billion yuan from the end of May.
The yuan deposits held by banks in Taiwan at the end of June fell for the third month in a row and also dipped to the lowest since February 2014, when the balance stood at 247.05 billion yuan.
In June, the yuan rose about 0.78 percent against the U.S. dollar amid easing trade tensions between Washington and Beijing as global financial markets widely turned upbeat about the trade issue ahead of a meeting scheduled between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit at the end of the month.
Market analysts said banks in Taiwan generally lowered their interest rates on yuan deposits, with only Citibank Taiwan bucking the downturn to raise its rates on one month yuan deposits, which prompted many investors to move their funds out of yuan deposits and park them in other financial products for higher returns.
According to the central bank, Citibank Taiwan offered 2.8 percent on its one-month yuan deposits in June, the highest among local banks.
Meanwhile, Mega International Commercial Bank offered 2.7 percent on three-month yuan deposits, and Jih Sun International Bank offered 2.8 percent, 2.9 percent and 3.0 percent, respectively, on its six-month, nine-month and 12-month yuan deposits, the highest level among Taiwanese banks, the central bank said.
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 banks in Taiwan hit an all-time high of 338.22 billion yuan.
At the end of June, yuan deposits in DBUs fell 4.84 billion yuan from a month earlier to about 232.25 billion, marking the 10th consecutive month of decline, while the balance of OBUs rose from 31.18 billion yuan to 32.90 billion , the central bank said.
The central bank said the drop in yuan deposits held by DBUs came as investors moved their funds to bonds denominated in currencies other than the yuan in June.
In addition, Taiwanese investors operating in China assigned their yuan deposits to pay for purchases, the central bank said.
Meanwhile, yuan-denominated remittances in June totaled about 143.64 billion yuan, down from 183.40 billion a month earlier, with remittances through DBUs totaling 69.97 billion yuan, down from 80.96 billion yuan a month earlier, and those via OBUs reaching 73.66 billion, also down from 102.44 billion yuan, according to the central bank.