Deposits in Chinese yuan held by local banks last month dropped to a six-year low of 255.92 billion yuan (US$36.66 billion) as the week-long Lunar New Year holiday weakened business activity, while other investment options gained popularity, the central bank said.
The latest balance suggested a 1.96 percent, or 5.12 billion yuan, decline from one month earlier and represented the lowest level since February 2014.
“The retreat came as little surprise given that interest rates on yuan deposits tapered off in recent years, making yuan deposits a less attractive investment tool,” the bank said.
Yuan deposits at domestic banking units fell 1.93 percent to 224.58 billion yuan, while deposits at offshore banking units shed 2.15 percent to 31.3 billion yuan, the bank said.
The larger decline in offshore banking units, which is limited to corporate clients, was caused by local insurers shifting funds to investment instruments overseas to pursue better yields, the bank said.
Local firms also needed money to settle trade payments, while the issuance of new funds lured some capital away from yuan deposits, it said.
The Bank of Panhsin (板信銀行) offers the highest interest rate for one-month yuan time deposits at 2.2 percent, Mega International Commercial Bank (兆豐商銀) offers the highest rate for three-month time deposits at 2.4 percent and Sunny Bank (陽信銀行) offers the highest rate for one-year time deposits at 2.65 percent, central bank data showed.
Yuan deposits might shrink further this month, as business disruptions persist in China amid the COVID-19 outbreak there, the central bank said.
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