Yuan deposit growth at Taiwanese banks promising: analysts
A record high in mainland yuan deposits taken by banks registered in Taiwan as of the end of March show optimism that the Chinese currency will appreciate against the U.S. dollar in the long run, analysts said.
They said that the mainland is gearing up to set up its Asia Infrastructure Investment Bank (AIIB), a move that is expected to further boost the visibility of the yuan in the global market, paving the way for a higher valuation of the currency against the greenback.
As China’s economy grew only 7 percent in the first quarter of this year, the slowest pace in six years, the market widely anticipates that the Beijing government will come up with more measures to stimulate the economy, analysts said.
As a result, the analysts said, there have been stronger yuan expectations among many investors, prompting them to raise the yuan holdings in their investment portfolios.
According to the central bank, the balance of the yuan deposits taken by Taiwanese banks’ domestic banking units (DBUs) and offshore banking units (OBUs) as of the end of March totaled 324.58 billion yuan (NT$1.63 trillion; US$51.93 billion), up from 318.77 billion yuan recorded a month earlier.
Yuan deposits taken by the banks’ DBUs as of the end of March rose 6.52 billion yuan, or 2.45 percent, from a year earlier to 272.57 billion yuan, while the balance of yuan deposits at the banks’ OBUs fell 705 million yuan or 1.33 percent to 52.01 billion yuan, the central bank data shows.
The central bank lifted a ban to allow local banks’ DBUs to conduct yuan- denominated business, including yuan deposits, in February 2013. Before the ban was removed, only banks’ OBUs had been allowed to conduct yuan- denominated transactions.