Taiwan has started compiling daily fixings for the offshore yuan’s spot and interbank interest rates as it seeks to boost lending in the Chinese currency and differentiate its market from Hong Kong’s.
The Taipei Foreign Exchange Market Foundation began releasing the reference rates at 11:15am yesterday based on contributions from 15 lenders, including Bank of China’s (中國銀行) Taipei branch, CTBC Bank Co (中信銀行) and Bank of Taiwan (台灣銀行). The spot fixing was 6.15 per US dollar, and the fixing for the one-month interbank rate was 3.04 percent.
Since an agreement with China paved the way for Taiwanese banks to start taking yuan deposits in February last year, the nation has accumulated 293 billion yuan (US$48 billion) of savings in the currency. Taiwanese lenders’ use of the currency remain limited, with about half redeposited at the clearing bank and only 7 percent used for loans, Credit Suisse Group AG estimated in May.
“It’s definitely positive and will help develop the domestic market,” Hong Kong-based Credit Agricole CIB strategist Dariusz Kowalczyk said.
The fixing could provide a reference for pricing yuan products such as loans and derivatives, Song Chiu-lai an adviser to Taiwan’s central bank said in November last year. The rates would also differentiate Taiwan’s market from Hong Kong’s and measure funding demand, Song said.