Taipei, Chinese yuan deposits held by banks operating in Taiwan as of the end of February fell, ending a nine- month rising streak as a fall suffered by the Chinese currency against the U.S. dollar turned away some investors, according to Taiwan's central bank.
Data compiled by the central bank shows that the balance of yuan deposits received by Taiwanese banks, including negotiable certificates of deposit (NCDs), at the end of February stood at 321.88 billion yuan (US$50.85 billion), down 2.02 billion yuan from a month earlier.
In February 2013, when cross-Taiwan Strait financial exchanges were on the rise under the pro-China Kuomintang government, 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.
In June, 2015, the balance of yuan deposits taken by banks in Taiwan hit an all-time high of 338.22 billion yuan.
Ho Pei-chen (???), a specialist with the central bank, said that the weakness of the yuan against the U.S. dollar prevented investors from raising their holdings in the yuan, but the fluctuations of the yuan deposits remained within an acceptable range.
In February, the yuan fell 0.8 percent against the greenback, while the Taiwan dollar dropped 0.57 percent against the U.S. dollar. Compared with the South Korean won, which fell more than 1 percent against the U.S. dollar, the Chinese currency was relatively stable.
Ho said that due to the yuan's depreciation, institutional investors' holdings dropped accordingly, as securities investment and trust firms and life insurers moved their funds from the yuan's deposits in their investment portfolios during the month.
Yuan deposits taken by banks' DBUs as of the end of February fell 2.23 billion yuan from a month earlier to about 292.1 billion yuan, while the balance held by banks' OBUs also dropped 203 million yuan from a month earlier to 29.79 billion yuan, the central bank said.
Meanwhile, yuan-denominated remittances in December totaled 113.89 billion yuan, up from 105.33 billion yuan in February, with remittances through banks' DBUs at 59.77 billion yuan and OBUs at 54.11 billion yuan, according to the central bank.
Many banks in Taiwan offered higher interest rates to attract yuan deposits in February, with Jih Sun International Bank offering 2.9 percent for one-month yuan deposits and KGI Bank offering 3.58 percent for three-month deposits, the highest level for the two types of time deposits among local banks, the central bank said.
In addition, Jih Sun Bank offered 3.4 percent for six-month yuan deposits, the highest level, while Jih Sun Bank offered 3.6 percent for nine-month deposits and KGI Bank offered 3.85 percent for one-year deposits, also the highest local levels, the central bank added.
Source: Focus Taiwan News Channel