Chinese yuan deposits in Taiwan banks fall in May for 3rd straight month

06/19/2021 04:21 PM
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Taipei, June 19 (CNA) Chinese yuan deposits held by banks in Taiwan dropped in May for the third consecutive month to a six-month low, according to the central bank.

Expecting limited appreciation of the Chinese currency against the U.S. dollar, individual and institutional investors moved their funds from yuan deposits to other investment instruments, the bank said.

Central bank data showed that as of the end of May, yuan deposits at Taiwanese banks stood at 238.04 billion yuan (US$36.96 billion), down by 1.08 billion yuan from a month earlier.

The May figure was the lowest since November 2020, when it was 235.46 billion, the data indicated.

Speaking with reporters earlier this week, Chen Wan-ning (陳婉寧), deputy director of the central bank's Foreign Exchange Department, said that since the yuan had been appreciating against the greenback for some time, many investors had anticipated that the Chinese currency would hit a ceiling soon.

Those investors were keen to seek new investment opportunities amid growing prospects for U.S. and Taiwan dollar-denominated assets, Chen said.

As of the end of May, yuan deposits at domestic banking units (DBUs) in the Taiwan banking system fell 1.29 billion yuan from a month earlier to 206.30 billion, while at their offshore banking units (OBUs) deposits rose 209 million yuan from a month earlier to 31.74 billion yuan, according to the central bank data.

Chen said many investors had withdrawn their funds from their yuan accounts at DBUs to invest in Taiwan dollar-denominated assets, which helped them reap more profits in May.

In addition, she said, many Taiwanese companies that generate sales in the Chinese currency had converted those funds into Taiwan dollars to pay cash dividends on their 2020 earnings, which also contributed to the reduction in yuan deposits at DBUs in May.

"It seemed most of those firms that converted their yuan into Taiwan dollars in May to meet fund demand had a good bottom line," Chen said.

Meanwhile, yuan deposits by individual investors at the DBUs fell in May to the lowest in almost five years, according to the central bank.

Yuan-denominated remittances also fell in May, dropping to 93.74 billion yuan from about 148.80 billion in April, the data showed.

Remittances through DBUs totaled 57.39 billion yuan in May, down from 82.30 billion yuan in April, while those via OBUs also fell, from 66.50 billion yuan a month earlier to 36.36 billion in May, according to the central bank.

(By Pan Tzu-yu and Frances Huang)

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