Taipei, Jan. 18 (CNA) Yuan deposits held by Taiwanese banks dropped sharply last year to 261.03 billion yuan (US$38.05 billion), as investor confidence in the currency fell due to the trade frictions between the United States and China, according to Taiwan's central bank.
The decline of 37.41 billion yuan from the previous year was the biggest annual drop since the business started in Taiwan in 2013 and the third consecutive year of decline, the central bank said.
Yuan deposits in Taiwan banks were 261.03 billion yuan in 2019, compared with 298.44 billion yuan at the end of the previous year, the data showed.
The central bank said the sharp year-on-year decline reflected caution among investors about the value of the Chinese currency amid the Washington-Beijing trade disputes, an economic slowdown in China, and a slower pace of the efforts by Chinese authorities to internationalize the yuan.
Despite the annual drop in yuan deposits in Taiwanese banks in 2019, the balance for the month of December increased slightly from 259.94 billion yuan seen a month earlier, marking the second consecutive monthly rise, the central bank said.
In December, yuan deposits in domestic banking units (DBUs) increased by 51 million yuan from a month earlier to 229.01 billion yuan on higher deposits by retail investors, while the balance in offshore banking units (OBUs) increased by 1.04 billion yuan to 32.20 billion yuan, the central bank said.
Meanwhile, yuan-denominated remittances in December totaled 123.05 billion yuan, up from 109.83 billion in November, the data showed.
Remittances through DBUs totaled 77.35 billion yuan, up from 60.29 billion yuan in November, while those via OBUs dropped to 45.70 billion from 49.54 billion yuan the previous month, according to the central bank
After Taiwan began allowing yuan deposits in 2013, the balance hit a record 338.22 billion yuan in June 2015 but has been trending downward since 2018, when the monthly figure fell below 300 billion yuan.
The highest interest rates on yuan deposits in Taiwan banks as of the end of December 2019 were 2.65 percent for one year at Sunny Bank, 2.45 percent on nine-month deposits at Jih Sun International Bank, and 2.78 percent on six-month deposits at Shanghai Commercial & Savings Bank, according to the central bank.
SinoPac Bank was offering a 3 percent interest rate on three-month yuan deposits, and Bank of Panhsin 2.2 percent on one-month deposits, the central bank added.
In February 2013, when cross-strait financial exchanges were on the rise under the then-Kuomintang government, Taiwan's central bank lifted its ban on yuan-denominated transactions by DBUs. Prior to that, only OBUs were allowed to accept yuan deposits or conduct other yuan transactions.