Taiwan’s yuan deposits down in July on mainland woes
Chinese yuan- denominated deposits held by banks operating in Taiwan were lower at the end of July from a month earlier on rising awareness of the downside risks in China’s economy, according to analysts.
Analysts said recent volatility in share prices in China’s equity markets and interest rate cuts in July by the People’s Bank of China (PBOC), China’s central bank, also led some currency investors in Taiwan to opt against increasing their holdings of the Chinese currency.
According to statistics compiled by Taiwan’s central bank, the balance of yuan deposits received by banks in Taiwan as of the end of July fell 1.57 billion yuan (US$245 million), or 0.47 percent, from a month earlier to 336.65 billion yuan.
It was the first time that yuan deposits in Taiwan had fallen month-on-month since the country’s central bank began allowing local banks’ domestic banking offshore units (DBUs) to offer yuan-denominated services, including yuan deposits, in February 2013.
Until the ban was removed, only banks’ offshore banking units (OBUs) had been allowed to conduct yuan- denominated transactions.
Yuan deposits held by Taiwanese banks’ DBUs totaled NT$282.92 billion yuan as of the end of July, down from 283.39 billion yuan a month earlier, the data showed.
The balance of yuan deposits at the banks’ OBUs also fell to 53.73 billion yuan from 54.83 billion yuan, according to the figures.
Expectations are that yuan deposits held by Taiwanese banks will continue to fall in August after the PBOC cut the yuan’s reference rate sharply against the U. S. dollar in recent sessions to send the Chinese currency into a tailspin.
Taiwan’s central bank contended, however, that it was too early to say whether yuan deposits held by Taiwanese banks will fall further as the yuan remained relatively strong compared with the Taiwan dollar.
According to the central bank, despite heavy losses suffered by the yuan last week, the Chinese currency has fallen about 3.78 percent against the U. S. dollar in the past 12 months, but the Taiwan dollar has shed 6.78 percent against the greenback during the same period.
The central bank figures also showed that yuan-denominated lending and interbank loans at the DBUs and OBUs as of the end of July rose 0.21 percent from a month earlier to 28.09 billion yuan.
At the same time, yuan- denominated remittances through these DBUs and OBUs fell 10.83 percent from a month earlier to 265.3 billion as of the end of July, the figures showed.
Currently, Taiwanese banks operate 69 DBUs and 59 OBUs, the central bank said.
In this Tuesday, Aug. 11 file photo, a bank clerk counts Chinese currency notes at a bank outlet in Huaibei in central China’s Anhui province. Chinese yuan-denominated deposits held by banks operating in Taiwan were lower at the end of July from a month earlier.