Taiwan is to launch onshore Japanese yen clearing and settlement services today, facilitating yen transactions for companies and individuals at lower costs, as bilateral trade increases and the Japanese currency gains favor.
The Taipei branch of Mizuho Bank Ltd will be the clearing bank for yen transactions in Taiwan and Financial Information Service Co (財金資訊) will provide settlement services, central bank Deputy Governor Yang Chin-long (楊金龍) told a news conference.
The Japanese lender won the position in June last year given its longstanding presence and significant size in the nation, Yang said.
The yen accounts for 15.44 percent of foreign currency trade in Taiwan, slightly ahead of the yuan at 15.41 percent, Yang said, as the yen’s fast depreciation boosts Taiwanese desire to visit Japan.
Still, the US dollar remains the most popular foreign currency, comprising 39.76 percent of overall transactions, Yang said.
Official export data lend support to the yen’s importance. Japan is a key destination of Taiwanese exports that reached US$19.91 billion last year, making up 6.3 percent of total exports, Ministry of Finance data showed.
Meanwhile, the neighboring country supplied 15.2 percent of Taiwan’s imports last year, valued at US$41.69 billion, according to ministry statistics.
The figures make Japan a heavyweight trade partner in terms of trading volume at 10.5 percent, virtually abreast with the US and Europe, while behind China’s 29.7 percent share, Yang said.
The close trade links suggest the need for quick yen clearing and settlement, the central bank said, adding that cross-border services might become available in May.
The yen is the latest addition to the central bank’s foreign currency clearing platform after the yuan in September 2013 and the greenback in March of that year.
The central bank plans to include the euro in June and offer delivery versus payment services for foreign currency-based bond and bill transactions the following month.
As of last month, the currency-clearing platform has helped cut more than NT$850 million (US$27.28 million) in transactions costs, the central bank said, as foreign-currency remittances previously had to pass through third parties and required two trading days to settle.
The platform allows banks to provide same-day remittances, the central bank said.
Tourism between Taiwan and Japan has also flourished in the past few years, Yang said.
Japan contributed 16.5 percent of tourists last year and was the destination for 25.1 percent of Taiwanese tourists, the central bank said.
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