Tue, Jul 16, 2019 - Page 12 News List

Yuan deposits hit major low point, central bank says

By Crystal Hsu  /  Staff reporter

Yuan deposits held by local banks fell to a five-and-a-half-year low of 265.16 billion yuan (US$38.57 billion) last month, as corporate and retail investors lost interest in the Chinese currency, the central bank said yesterday.

The balance represented a 1.16 percent decline from the level seen in May, even though the yuan rose 0.78 percent against the US dollar last month, the central bank said.

The retreat has become a regular phenomenon as there are no longer high interest rates on yuan deposits, it said.

Consequently, yuan deposits at domestic banking units — used by retail clients — totaled 232.26 billion, including negotiable certificates of deposit, down by 0.2 percent and marking the 10th consecutive month of decline, the central bank said.

Declining yuan deposits might be due to a lack of interest among local investors to extend time deposits upon their maturity, as fund houses have launched new yuan-based investment tools that offer better yields, it said.

The ongoing trade dispute between the US and China is also placing pressure on the yuan, analysts said.

However, yuan deposits at company-focused offshore banking units last month gained 0.55 percent month-on-month to 32.9 billion yuan, including negotiable certificates of deposit, the central bank said.

It attributed the increase to capital and settlement needs among local electronics firms.

Some funds likely flowed to yuan-based bonds in pursuit of higher returns, the central bank said.

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