RMB deposits at Taiwan banks’ DBUs fall for the first time
A bank clerk counts renminbi banknotes, Oct. 16. (File photo/CNS)
The Central Bank of the Republic of China (Taiwan) says renminbi-denominated deposits accepted by domestic banking units (DBUs) of Taiwanese banks at the end of October fell for the first time since the DBUs were allowed to conduct transactions in the Chinese currency in February 2013.
At the end of October, data compiled by the central bank showed that the balance of renminbi deposits held by the DBUs at the end of October had slipped by about 2.51 billion yuan (US$410 million) or some 1.01% from a month earlier to 245.7 billion yuan (US$40.14 billion).
Yen Hui-huang, deputy director of the central bank’s foreign exchange department, said the decline is largely due to enterprises using part of their yuan-denominated funds to meet their day-to-day operations. But Yen said individuals in Taiwan have still raised their renminbi deposits at their banking accounts.
When asked whether the Shanghai-Hong Kong Stock Connect, a trading platform effective from Nov. 17, had prompted investors there to move their funds to Hong Kong, targeting stocks in Shanghai, Yen said he had no idea about the situation.
The Shanghai-Hong Kong Stock link is a mechanism through which foreign investors will be able to trade mainland A-shares in Hong Kong, and investors in Shanghai will be able to trade Hong Kong shares in mainland China.
By taking into account both the DBUs and offshore banking units (OBUs) of Taiwanese banks; renminbi deposits totaled 300.52 billion yuan (US$49.1 billion) at the end of October, up less than 100 million yuan (US$16.3 million) from a month earlier. The growth was the slowest since the yuan transactions kicked off in 2013.
Banking sources said that although the renminbi has returned to an appreciation pattern against the US dollar, it is unlikely that the Chinese currency’s value will steam ahead significantly as it did before, which has dampened the willingness of people in Taiwan to raise their yuan positions for the moment.
In addition, there are limited channels available to yuan investors, most of whom still depend on interest income from their yuan savings accounts for profit, which is why they seem to be hesitating to boost their yuan deposits.
While Taiwan has declared itself keen to transform itself into an offshore renminbi trading hub, the size of the country’s yuan deposits serve as a precondition to the success of its ambitions.
The expansion of the yuan pool in Taiwan will depend on whether enterprises are willing to use Taiwan as a fundraising market for the currency or whether trade settlements denominated in the yuan in Taiwan will grow.
Hong Kong lifted restrictions on a ceiling for local residents to buy 20,000 yuan (US$3,270) a day after the Shanghai-Hong Kong Stock Connect started. Perng Fai-nan, governor of Taiwan’s central bank, said it was “very likely” Taiwan would follow suit, but no concrete measures for the daily yuan exchange limit have been announced.
