Chinese yuan deposits are expected to surge on higher interest rates, following the central bank’s decision to allow local banks to accept yuan deposits from next month at the earliest, analysts said.
The possible appreciation of the yuan in the near future will be another driver attracting Taiwanese to make yuan deposits, they added.
The Taipei branch of Bank of China Ltd (中國銀行) — the clearing bank for the yuan in Taiwan — on Friday inked an agreement with the People’s Bank of China (中國人民銀行) regarding settling of yuan-denominated transactions in Taiwan.
The nation’s central bank later announced that other local banks would be allowed to accept yuan deposits from next month, before the Lunar New Year holiday, at the earliest.
“The interest rate on yuan deposits in Taiwan will depend on market conditions,” central bank Deputy Governor Yang Chin-lung (楊金龍) told a media briefing on Friday.
Taipei-based Standard Chartered Bank economist Tony Phoo (符銘財) said he expected yuan deposits to account for between 3 percent and 5 percent of Taiwan’s total annual deposits from the start of the new business.
Phoo said that the yuan may appear attractive to Taiwanese investors due to its low fluctuation risks, and more importantly, the currency is riding an rising trend in the medium term and will likely rise above 6.1 yuan against the US dollar by the end of this year.
The Chinese currency has appreciated about 17 percent against the greenback since the end of 2007.
Judging from the favorable conditions of the yuan, Phoo said the currency is expected to make up 10 percent of Taiwan’s total deposits by the end of 2015, and could even account for between 30 percent and 35 percent of total deposits longer term.
Citibank Taiwan said that its customers are likely to change between 5 percent and 10 percent of their New Taiwan dollar denominated deposits for yuan deposits in the future.
According to Citibank Taiwan, local deposit balances exceeded NT$32 trillion (US$1.1 trillion) at the end of November last year.
The bank said yuan-denominated funds are expected to range between 300 billion yuan and 600 billion yuan in the future.
Before the establishment of the cross-strait currency clearing system more than a year ago, only offshore banking units of Taiwanese banks were allowed to conduct yuan transactions, including taking deposits, extending loans and making remittances.
These units have offered interest rates on yuan deposits as high as 3.5 percent to 4 percent, the Chinese-language Economic Daily News reported on Saturday.
Citing a local bank official, the paper said that the onshore banking units of local lenders could offer an interest rate of about 3 percent for longer-term yuan time deposits during promotional periods.
The Chinese-language Commercial Times yesterday said that Taiwan’s major state-run banks — including the Bank of Taiwan (台灣銀行), Mega International Commercial Bank (兆豐國際商業銀行), Land Bank of Taiwan (土地銀行) and Taiwan Cooperative Bank (合作金庫銀行) — have been discussing setting the interest rate for one-year yuan-denomiated time deposits at about 1.1 percent or 1.2 percent, which would be on a par with NT dollar deposits.
However, the report said that for larger yuan deposits, local banks may be willing to offer higher interest rates to attract premium clients.
Even so, the central bank said investors should cautiously evaluate their yuan-related investments bcause risks of the liquidity, credit and exchange rate of the Chinese currency remain uncertain.
PLANNED OUT: The government is lifting sale and export restrictions on 60% of the 20 million masks made daily, but people can still make purchases using their NHI cards Twenty thousand boxes of 50 masks each would be on sale at FamilyMart convenience stores starting tomorrow, Taiwan FamilyMart Co Ltd (全家便利商店) said yesterday. A box of 50 masks would cost NT$249 for those with FamilyMart memberships and NT$299 for those without, with no limits placed on how many boxes a person can buy, the company said. Convenience store chain operator Hi-Life International Co Ltd (萊爾富) said that it would also start selling masks from tomorrow. It has yet to announce details about prices and quantity. Hypermarket chain operator Carrefour Taiwan (家樂福) said that it would start selling packs of five
BOOSTING BUYING: A source said that the idea of pre-ordering vouchers online is being considered, but the preliminary plan is for people to buy them at post offices A stimulus voucher program to be rolled out next month to boost consumption would be available not only to Taiwanese, but also foreign nationals and Chinese spouses who hold residency permits, a source familiar with the matter said yesterday. The government is fine-tuning the details of the program, which involves issuing vouchers for in-store purchases to revive buying amid the COVID-19 pandemic. During a radio interview on Monday last week, National Development Council (NDC) Minister Kung Ming-hsin (龔明鑫) said that the plan is to allow anyone, regardless of age or income level, to buy NT$3,000 (US$99.89) worth of vouchers for
Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) is expected to recover quickly from the effects of COVID-19, as life returns to normal and thanks to the government’s domestic travel incentives, Yuanta Securities Investment Consulting Co (元大投顧) said in a note on Friday. THSRC’s business might have bottomed out after revenue fell 49.83 percent year-on-year to NT$2.03 billion (US$67.59 million) in April, the lowest in nearly 10 years, while combined revenue in the first four months dropped 26.44 percent to NT$11.63 billion, as the COVID-19 outbreak reduced ridership, the investment consultancy said. “The worst should be over in April as domestic tourism
Delta Electronics Inc (台達電), the nation’s leading power management solutions provider, has signed an agreement to acquire Canadian software firm Trihedral Engineering Ltd to bolster its smart production efforts, it said on Saturday. Delta said in a statement that it would acquire Trihedral for C$45 million (US$32.68 million) through its 100 percent-owned subsidiary Delta Electronics (Netherlands) BV. Trihedral specializes in supervisory control and data acquisition (SCADA) and industrial Internet of Things software, which would strengthen Delta’s hardware offerings in fast-growing areas such as automation, artificial intelligence and data analytics, it said. “The collection, monitoring and analyzing of data are critical to Delta’s two