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Taiwanese banks' Chinese yuan deposits down for 2nd consecutive month

Taiwanese banks' Chinese yuan deposits down for 2nd consecutive month

Taipei, April 16 (CNA) Chinese yuan-denominated deposits held by banks operating in Taiwan fell for the second consecutive month in March in the wake of the Chinese currency's depreciation against the U.S. dollar, according to the central bank.

Citing statistics, the bank said that the balance of yuan deposits, including negotiable certificates of deposit (NCDs), held by banks in Taiwan totaled 314.32 billion (US$48.36 billion) as of the end of March, down 2.503 billion yuan or 0.79 percent from a month earlier, marking the second consecutive monthly drop.

The fall in March pushed down the balance of yuan deposits taken by banks in Taiwan to a new 14-month low.

Taiwan's central bank lifted a ban against local banks' domestic banking units (DBUs) conducting yuan-denominated transactions, including yuan deposits, in February 2013.

Before the ban was lifted, only offshore banking units (OBUs) of Taiwanese banks had been allowed to take yuan deposits and conduct other yuan transactions.

As of the end of March, yuan deposits (including NCDs) held by the DBUs of Taiwanese banks fell 1.17 billion yuan from a month earlier to 272.86 billion yuan, while deposits denominated by the Chinese currency in the OBUs also dropped 1.34 billion yuan from a month earlier to 41.46 billion yuan.

The central bank said that the yuan's weakness against the U.S. dollar in March led some investors to move their funds to assets denominated by other currencies. Others decided not to renew their contracts after their yuan time deposits' terms matured, the bank said.

After the depreciation in March, the yuan has stabilized in recent trading sessions, the central bank said, adding that investors, however, need more time to observe the currency's fluctuations down the road.

Yuan deposits in Taiwan hit a new high of 338.2 billion yuan in June 2015, but started to move in a seesaw pattern in the wake of the Chinese currency's volatility, which dampened investors' interest to keep it, market analysts said.

As of the end of March, yuan-denominated remittances through these DBUs and OBUs rose 26.69 billion yuan or 25.33 percent from a month earlier to 132.09 billion, while yuan denominated interbank loans and other lending fell 447 million yuan or 3.1 percent from a month earlier to 14.03 billion yuan, the central bank said.

In a recent research report, Standard Chartered said yuan deposits in Taiwan's banking system are expected reach 330 billion yuan to 350 billion yuan by the end of the year. (By Chiu Po-sheng and Frances Huang)


Updated : 2022-05-18 17:58 GMT+08:00