Chinese yuan-denominated deposits held by Taiwan-based banks last month fell to a 15-month low, reflecting a downbeat mood about the yuan’s strength at a time when economic growth in China continues to show signs of slowing down, according to the local central bank.
Citing data, the central bank last week said that the balance of yuan deposits, including negotiable certificates of deposit (NCDs), held by banks in Taiwan totaled 310.82 billion yuan (US$47.82 billion), down 3.496 billion yuan, or 1.11 percent, from a month earlier.
Last month’s balance was not only the lowest in 15 months, but marked the third consecutive month for the deposits to fall in the Taiwanese banking sector, according to the data.
Analysts said that the drop in yuan deposits in Taiwan showed that investors’ enthusiasm toward the Chinese currency has been on the decline, and they are betting on a lower yuan amid a slowdown in the Chinese economy, the second-largest in the world.
In the first quarter, China’s economy grew 6.7 percent from a year earlier, compared with a 6.8 percent increase seen in the previous quarter. Last year, China’s economy grew 6.9 percent from a year earlier, the slowest pace in 25 years.
Central bank data showed that at the end of last month, yuan deposits, including NCDs, held by the domestic banking units (DBUs) of Taiwanese banks reached 271.76 billion yuan, down 1.096 billion from a month earlier, while yuan deposits, including NCDs, taken by the offshore banking units (OBUs) of banks in Taiwan also dropped 2.4 billion yuan from a month earlier to 39.06 billion.
Analysts said that amid hopes of a lower yuan down the road, many retail investors in Taiwan chose not to renew their yuan time deposit contracts when their contracts expired.
Analysts added that some institutional investors moved their funds out of yuan-denominated assets for other investment purposes, sending the yuan deposit balance even lower.
As of the end of last month, yuan-denominated interbank loans and other lending through these DBUs and OBUs fell to 12.31 billion yuan from 14.03 billion seen a month earlier, while yuan denominated remittances rose to 163.53 billion yuan from 132.09 billion yuan.
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