With a fast-growing pool of Chinese yuan and a close trade relationship with China, in the long term the nation has the potential to become a leading offshore yuan center, foreign banks said in Hong Kong.
The internationalization of the yuan is to continue this year, with more regions or cities, including Taiwan, Singapore, Seoul, Paris and London, aiming to follow Hong Kong’s example and compete in the huge business by accelerating offshore yuan development, analysts have said.
“Compared with other regions, Taiwan has stood out and shown its market potential for the offshore yuan business,” Standard Chartered Bank (Taiwan) Ltd president and chief executive officer John Tan (陳銘僑) said at a forum in Hong Kong on Friday.
Taiwan’s domestic banking units have been allowed to receive yuan-based deposits since early 2013.
In the past two years, Taiwan has seen the size of its yuan pool grow rapidly, with the outstanding balance of yuan-denominated deposits reaching 302.27 billion yuan (US$48.49 billion) as of the end of last year — the second-largest offshore yuan pool worldwide — according to central bank data.
In addition, the issuance of yuan-based bonds in Taiwan has reached 31.4 billion yuan, making the nation the second-largest offshore market for yuan bonds, data showed.
Compared with other markets, Taiwan has a closer relationship with China in terms of trade, with trade settlement in yuan still having a lot of growth potential, which could be the next focus, Tan said.
There are about 100,000 Taiwanese businesspeople operating businesses in China, and about 1 million Taiwanese living in China, which further raises the demand for yuan settlement, Tan added.
Standard Chartered forecast that the outstanding balance of yuan-denominated deposits in Taiwan would be between 400 billion yuan and 450 billion yuan by the end of this year.
Standard Chartered Bank (Taiwan) managing director and global head of yuan solutions for corporate and institutional clients Carmen Ling (凌嘉敏) said the launch of a free-trade zone in China’s Fujian Province in March might further benefit yuan development in Taiwan by providing a new channel for the large amounts of yuan-based deposits in Taiwan to flow back to China.
Overall, the yuan has continued its quick pace of progress worldwide over the past year, with the People’s Bank of China signing or renewing 13 bilateral currency swap agreements with other central banks.
The establishment of yuan clearing banks in Australia, Europe and Canada in recent months has also increased the use of yuan in trade settlements, cross-border payments and bond issuances in offshore markets besides Hong Kong.
Australia and New Zealand Banking Group Ltd senior economist Raymond Yeung (楊宇霆) said that the yuan might become a major currency actively traded in global financial markets by 2020, mainly due to China’s efforts to liberalize its capital accounts.
Daily foreign exchange turnover of yuan would reach US$3.4 trillion at that time, equivalent to 16 percent of China’s GDP, compared with US$80 billion, or 0.8 percent of GDP, recorded in 2013, according to the estimates of an ANZ research team.
Contract chipmaker United Microelectronics Corp (UMC, 聯電) yesterday said it has signed a memorandum of understanding (MOU) with Polar Semiconductor LLC to collaborate on the production of 8-inch wafers in the US. The collaboration aims to strengthen 8-inch wafer manufacturing in the US amid Washington’s efforts to increase onshore manufacturing of semiconductors, contribute to supply chain resilience against shifting geopolitical dynamics, and ensure a secure domestic supply of power semiconductors critical to automotive, electric grids, robotic manufacturing and data centers, the companies said in a joint statement. Under the MOU, Polar and UMC will identify devices for Polar to manufacture at
TECH TITANS: Amazon’s latest chip joins Google in competing for the 90 percent market share held by Nvidia, which claims it is ‘a generation ahead of the industry’ Amazon Web Services (AWS) on Tuesday launched its in-house-built Trainium3 artificial intelligence (AI) chip, marking a significant push to compete with Nvidia Corp in the lucrative market for AI computing power. The move intensifies competition in the AI chip market, where Nvidia dominates with an estimated 80 to 90 percent market share for products used in training large language models that power the likes of ChatGPT. Google last week caused tremors in the industry when it was reported that Facebook-parent Meta Platforms Inc would employ Google AI chips in data centers, signaling new competition for Nvidia. This followed the release last month of
INSULATED: The company said it is less exposed to global complications, as it has built a strong footprint worldwide, and has multiple sources of rare earths and raw minerals Merck Group yesterday said it would ramp up production next year at its new flagship facility in Kaohsiung’s Lujhu District (路竹) to satisfy growing demand for advanced semiconductor materials and specialty gases, and to address supply resilience issues amid mounting geopolitical risks. Merck made the remarks during a news conference before the inauguration of its 500 million euros (US$582.1 million) facility, which is also to supply other markets in the Asia-Pacific region, it said. Merck executive board deputy chair and electronics CEO Kai Beckmann told reporters the company adopted a “local-for-local” strategy about seven years ago to address the cycle time of
Two companies wholly owned by the daughter of the founder of Hon Hai Precision Industry Co (鴻海精密) on Monday reported to the Taiwan Stock Exchange that they would dispose of all of the Hon Hai shares they hold. In filings with the exchange, Hong Wei Investment Co (鋐維) said it would sell the 2.771 million Hon Hai shares it holds and Frontier Investment Corp (承鋒投資) said it would sell its 2.409 million Hon Hai shares from tomorrow until Jan. 3 next year. The two companies are wholly owned and chaired by Shirley Gou (郭曉玲), the eldest daughter of Hon Hai founder Terry
RSS