Yuan deposit growth of Taiwanese banks promising: analysts
Taipei, April 16 (CNA) A record high in Chinese 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 Thursday.
They said that China 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 (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.
The statistics indicate that yuan remittances through Taiwanese banks’ DBUs as of the end of March rose 84.71 percent from a year earlier to 169.01 billion yuan, while remittances through the banks’ OBUs rose 30.93 percent to 104.18 billion yuan.
Yuan remittances through banks registered in Taiwan totaled 273.18 billion yuan as of the end of March, up from 171.06 billion yuan recorded a month earlier, the statistics show.
The central bank said that Taiwanese banks generally offer higher yuan deposit rates, as these banks are eager to receive yuan in a bid to reinvest the currency.
According to the central bank, Mega International Commercial Bank offered a 4 percent one-month yuan deposit rate, Shin Kong Commercial Bank 3.95 percent, Bank of Taiwan 3.9 percent and First Commercial Bank 3.8 percent, higher than than 3.45 percent offered by Bank of China’s Taipei branch.
