Yuan deposits held by local banks last month shrank 1.96 percent to a 68-month low of 259.76 billion yuan (US$37.06 billion), as corporate and retail investors lost interest in the currency, the central bank said yesterday.
It was the lowest level since March 2014 and bucked the yuan’s value against the US dollar last month after Washington and Beijing agreed to put the latest round of tariff increases on hold pending trade negotiations.
Yuan deposits held by offshore banking units — mostly used by corporate clients — shed 2.77 percent to 31.02 billion yuan, deeper than a 1.85 percent drop at domestic banking units to 228.74 billion yuan, the central bank said.
Some corporate clients and mutual funds transferred yuan deposits into investment tools denominated in other currencies as yuan deposits no longer enjoy high interest rates, it said.
One institutional investor raised its stake in other foreign currency-denominated bonds rather than yuan deposits, while mutual funds sought higher returns in foreign-currency denominated securities, it added.
In addition, local firms wired money to support affiliates in China, helping bring down yuan deposit levels, the bank said.
There were 10 new yuan-based retail fund products launched, some of which were sold as unit-linked insurance policies, the bank said.
The decline in yuan deposits was not limited to Taiwan, as Hong Kong holdings fell by 20.7 billion yuan and Singapore by 1 billion yuan, it said.
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