Onshore yuan-denominated deposits last month rose to 125.553 billion yuan (US$17.24 billion), up 2.37 percent from a month earlier and rising for the second consecutive month, data released yesterday by the central bank showed.
The monthly increase of 2.909 billion yuan from 122.644 billion yuan in October came as some companies remitted money to Taiwan and deposited it in yuan after recovering previous investments in yuan-denominated equities and bonds, the central bank said.
Additionally, some companies wired money home to make yuan-denominated payments, while some local manufacturers remitted overseas yuan deposits back to Taiwan, which also helped expand the overall balance of yuan deposits last month, it said.
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Although the US Federal Reserve has cut interest rates, the US dollar remains at a high level against other major currencies and is still more attractive than the yuan, the central bank said.
Therefore, it remains to be seen whether the rebound in yuan deposits would be sustained as the overall balance has been in the doldrums for several months, it said.
After falling below 300 billion yuan at the end of 2018, yuan deposits declined for six consecutive years through last year. So far this year, the balance of yuan deposits has ranged between 120 billion yuan and 130 billion yuan, with the full-year balance likely to show another year of annual decline.
That is because US president-elect Donald Trump has promised to impose tariff hikes on US imports after taking office, and China is reportedly considering allowing the yuan to weaken to brace for higher tariffs in Trump's second presidency, therefore the market is bearish on the outlook for the Chinese currency, analysts said.
Onshore yuan deposits include those at local banks’ domestic banking units (DBUs) and those at offshore banking units (OBUs) in Taiwan.
Central bank data showed that yuan deposits at DBUs increased 1.02 percent from the previous month to 91.292 billion yuan, while those in OBUs rose 6.15 percent to 34.261 billion yuan.
Based on central bank information, Bank SinoPac (永豐銀行) offers the highest interest rate in Taiwan for one-month yuan deposits at 5 percent, Sunny Bank (陽信銀行) provides the highest rates for three-month deposits at 1.5 percent, and Bank of Panhsin (板信銀行) offers the highest rates for six-month and one-year yuan deposits at 1.65 percent and 1.75 percent respectively.
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