TAIPEI (CNA) – Chinese yuan deposits held by banks operating in Taiwan kept rising to hit a high in 19 months at the end of October amid reinforced market confidence in the future movement of the Chinese currency, according to the local central bank.
The bank said the stronger faith of investors in holding the yuan came after the currency appreciated against the U.S. dollar so that the balance of yuan deposits received by Taiwanese banks, including negotiable certificates of deposit (NCDs), at the end of October totaled 313.81 billion yuan (US$47.40 billion), up 1.49 billion yuan or 0.47 percent from the end of September.
The October yuan deposit figure was the highest level since March 2016, when the balance reached 314.32 billion yuan. October marked the sixth consecutive month for Taiwanese banks to see their yuan deposits grow, the central bank’s data indicated.
In October, the yuan rose about 0.27 percent against the greenback. In February 2013, 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 take yuan deposits and conduct other yuan transactions.
The central bank’s data showed that yuan deposits taken by banks’ DBUs at the end of October fell about 1.0 billion yuan from a month earlier to 31.22 billion yuan, but the balance held by banks’ DBUs rose 2.49 billion yuan from a month earlier to 283.09 billion yuan.
The central bank said the increase in yuan deposits held by banks’ DBUs reflected the fact that Taiwanese investors needed the Chinese currency to meet fund demand for investments in China.
Other investors tended to raise their yuan assets in a bid to buy property in China and boost their wealth portfolios, the central bank said, adding that the rising holdings by the DBUs helped Taiwan’s yuan deposits grow at a stable pace.
Meanwhile, yuan-denominated remittances in October totaled 72.69 billion yuan, down from 93.18 billion yuan in September, with remittances through banks’ DBUs at 38.85 billion yuan and OBUs at 33.85 billion yuan, according to the central bank.
It said many banks in Taiwan offered high interest rates to attract yuan deposits in October, with Jih Sun International Bank (日盛銀) offering 3.1 percent for one-month yuan deposits and 3.7 percent for three-month deposits.
In addition, Ta Chong Bank (大眾銀) offered 3.8 percent for six-month yuan deposits, while Jih Sun Bank offered 3.6 percent for nine-month deposits and Standard Chartered Bank offered 3.8 percent for one year deposits, the central bank said.
By Chiu Po-sheng and Frances Huang