With the US dollar strengthening, which has weakened the Chinese yuan, lending extended by Taiwanese banks to China in the second quarter ended four quarters of increases, according to the central bank.
Data compiled by the central bank showed that outstanding international claims by Taiwanese banks on a direct risk basis to China totaled US$44.62 billion as of June 30, down from US$46.91 billion at the end of March.
The central bank on Friday said that the decline was because of a weakening yuan, which fell 5.6 percent against the US dollar in the second quarter as trade friction between the US and China escalated, prompting international funds to flow to the US dollar as a safe haven.
Despite the fall in Taiwanese banks’ exposure, China remained the nation’s second-largest debtor, trailing only the US, where exposure among Taiwanese banks totaled US$69.35 billion on a direct risk basis, the central bank said.
On an ultimate risk basis, which calculates a country’s consolidated debts after risk transfers, exposure to China fell from US$71.23 billion in the first quarter to US$70.75 billion in the second quarter, ending a four-quarter rising streak due to depreciation of the yuan, the data showed.
The central bank said aggregate international claims by banks in Taiwan at the end of June totaled US$401.7 billion, down US$4.7 billion, or 1.15 percent, from three months earlier on a direct risk basis.
Non-bank private firms made up 63.02 percent of Taiwan’s exposure, banks accounted for 29.85 percent and foreign public entities represented 7.12 percent, the central bank said.
On an ultimate risk basis, aggregate international claims by Taiwanese banks fell 1.1 percent to US$385.3 billion from a quarter earlier, it said.
After the US and China, Luxembourg was the nation’s third-largest debtor on a direct risk basis, owing US$38.94 billion.
Hong Kong was fourth with US$38.90 billion in debt, ahead of Japan with US$31.01 billion, Australia with US$18.83 billion, the Cayman Islands with US$16.50 billion, the UK with US$15.41 billion, Singapore with US$14.86 billion and the British West Indies with US$13.15 billion, central bank data showed.
The nation’s top debtors, whose order was unchanged from three months earlier, accounted for 75.08 percent of total international claims on a direct risk basis, the central bank said.
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