Chinese yuan deposits in Taiwan banks fall to lowest in over 9 years
ROC Central News Agency
04/21/2023 03:46 PM
Taipei, April 21 (CNA) The value of Chinese yuan deposits held by the Taiwanese banking system continues to fall and reached the lowest level in more than nine years at the end of March, with the interest rate hike cycle by the U.S. Federal Reserve prompting investors to move to greenback-denominated assets, according to the local central bank.
Data compiled by the central bank showed that yuan deposits held in Taiwanese banks at the end of March fell 7.056 billion yuan (US$1.03 billion) from a month earlier to 174.425 billion yuan, the lowest level since December 2013, when the figure stood at 182.6 billion yuan.
With more and more investors shifting from Yuan accounts to better-earning U.S. dollar accounts in the wake of an aggressive Fed, yuan deposits held by the local banking sector fell below the 200 billion yuan mark at the end of December 2022 for the first time since December 2013, and have continued to move lower.
Yuan deposits hit an all-time high of 338.22 billion yuan in June 2015, but since the balance fell below the 300 billion yuan mark at the end of 2018, the amount has mostly trended lower.
The domestic banking units (DBUs) of local banks have been allowed to conduct yuan-denominated transactions since February 2013, when financial exchanges with China were on the rise under the then Kuomintang government. Before the rule change, only offshore banking units (OBUs) were permitted to conduct yuan transactions.
At the end of March, yuan deposits at the DBUs of Taiwanese banks fell 6.279 billion yuan from a month earlier to 147.279 billion yuan, while yuan deposits at OBUs also dropped from 27.923 billion yuan seen at the end of February to 27.146 billion yuan, according to the central bank.
In addition to the yuan losing favor relative to the U.S. dollar, the central bank said, the fall in deposits held by DBUs also came after some Taiwanese electronics suppliers with operations in China assigned the yuan from their accounts to pay for material purchases, while some companies in the local old economy sector converted their earnings from yuan to the Taiwan dollar at the end of the first quarter.
Yuan deposits in retail investors' accounts also moved lower for the 25th consecutive month at the end of March, the central bank said.
The central bank said interest rates offered by Taiwanese banks appeared less attractive, prompting both institutional and retail investors to move their funds out of the yuan accounts.
According to the central bank, Hwatai Bank currently offers the highest interest rate of 1.3 percent among banks in Taiwan for one-month yuan deposits, while Sunny Bank offers the highest rate of 1.9 percent for three-month yuan deposits and the highest 2.0 percent for six-month yuan deposits.
In addition, Taiwan Business Bank's nine-month interest rate is the highest at 1.4 percent for yuan deposits, while Sunny Bank's one-year interest rate is the highest at 2.2 percent, the central bank said.
Compared with an average of around 4 percent in the U.S. dollar deposits Taiwanese banks currently offer, the yuan's deposit rate appeared less attractive in the local market, the central bank added.
Meanwhile, yuan-denominated remittances in March totaled 257.00 billion yuan, up from about 174.432 billion yuan in February, the central bank's data showed.
Remittances through DBUs totaled 121.445 billion yuan in March, up from 94.125 billion yuan a month earlier, while those via OBUs also rose from 80.307 billion yuan to 135.555 billion yuan, according to the central bank.
(By Pan Tzu-yu and Frances Huang)
Enditem/AW
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