Yuan deposits held by local banks last month shed 1.72 percent to the lowest level this year at 237.84 billion yuan (US$36.97 billion), ending two months of gains, as corporate accounts trimmed holdings in favor of other investment tools, the central bank said yesterday.
The figure suggests a fall of 4.17 billion yuan, as deposits at offshore banking units shrank 9.15 percent to 29.89 billion yuan, while softening 0.55 percent to 207.95 billion yuan at domestic banking units, it said.
The retreats came after local financial institutes cut holdings of the Chinese currency and raised stakes in bonds denominated in other currencies, it said.
The change in fund deployments did not necessarily suggest a that the yuan might weaken, but that other investment options are expected to generate higher yields, the bank said.
The yuan picked up 0.17 percent against the US dollar last month, but lost 0.74 percent against the New Taiwan dollar, making it less attractive for local investors, it said.
In addition, most market analysts believe that the US Federal Reserve would start tapering off its bond-purchase program by the end of this year, which would lend support to the greenback against other major currencies, it said.
However, retail accounts tend to exit yuan-denominated time deposits when their tenures expire, as interest rates decline, the bank said.
Bank SinoPac (永豐銀行) offers the highest interest rate of 3.05 percent for one-month yuan deposits, while Chang Hwa Commercial Bank (彰化銀行) offers the highest interest rate for three-month yuan deposits of 2 percent and Standard Chartered Bank has the highest rate for six-month deposits of 3.5 percent.
The drop in overall yuan deposits had also to do with subsiding settlement needs arising from cross-strait trade via third nations, the central bank said.
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