By Linger Liu ,The China Post

TAIPEI, Taiwan — Savings of Chinese yuan in 46 Taiwan banks totaled NT$50 billion (10 billion yuan) at the beginning of March, according to the Central Bank of the Republic of China (Taiwan).

The yuan deposit service began Feb. 6 under an agreement signed with the People’s Bank of China. Local banks initially offered high interest rates, with an average of around 2-3 percent.

Interest Rate in Decline Due to the high demand for Chinese yuan savings accounts, local banks have started to reduce the once highly favorable interest rates, according to bank sources. Yuanta Bank (元大銀行), which had offered a three-month savings service with 3.5-percent interest, though the rate has since been reduced to 1.5 percent. First Commercial Bank (第一銀行) has also reduced the interest rate of six-month term savings down to 1.38 percent from around 2 percent.

Local banks said there were many savings packages with rates up to 3 percent. With the increasing demand for yuan savings accounts, a greater number of banks are reducing benefits.

Yuan Service has Enough Investors Before the Chinese New Year, demand for yuan-denominated investment services was strong, according to local banks. Many banks offered interest rates of around 3 percent when the service first became available in Taiwan.

Local banks said the interest rate is forecast to see a decline to around 1 to 2 percent.

Yuanta Bank said it had set Feb. 26 as the last day people could take advantage of the high-yield Chinese yuan savings accounts. The interest rate for three-month term accounts has declined, as well rates for other term saving services, the bank said.

The six-month, nine-month and one-year term rates will be set at 1.68 percent, Yuanta said. The bank’s flexible savings account currently has a 0.35-percent interest rate, and the one-month savings interest rate is 1.08 percent. First Commercial Bank offers a flexible saving account with a 0.3-percent interest rate, with a one-month term savings option at 0.88 percent and a three-month term savings account at 1.18 percent. The bank also offers a six-month term savings account that yields 1.38-percent interest.