Onshore yuan-denominated deposits last month slid to 120.071 billion yuan (US$16.88 billion), down 1.29 percent from a month earlier and the lowest in nearly 11 years, data released by the central bank showed yesterday.
The monthly decrease of 1.568 billion yuan from 121.639 billion yuan in August marked a fourth consecutive month of decline, the data showed.
It came as investors and companies continued to convert their yuan-denominated deposits into US dollars amid growing worries about a slowdown in the world’s second-largest economy, the central bank said.
Photo: CNA
The key to halting the decline in yuan deposits is interest rates, it said.
While the US Federal Reserve has started to cut interest rates, the odds of the Fed cutting rates aggressively in the near term are low given the resilience of the US economy, lending support to the US dollar, it said.
Other factors such as ongoing geopolitical tensions and next month’s US presidential election have also raised investors’ risk awareness, prompting them to move funds into the US dollar-denominated assets, pushing up the greenback, the central bank said.
Onshore yuan deposits include those parked at local banks’ domestic banking units (DBUs) and those at offshore banking units (OBUs) in Taiwan.
Central bank data showed that yuan deposits last month fell to their lowest level since October 2013, with DBU deposits decreasing 0.41 percent from the previous month to 91.563 billion yuan and OBU deposits down 4 percent to 28.508 billion yuan.
The central bank attributed the larger decrease in OBU deposits to firms in the electronics industry converting their yuan-denominated deposits into US dollars for fund management purposes.
Based on information provided by the central bank, Bank SinoPac (永豐銀行) offers the highest interest rate in Taiwan for one-month yuan deposits at 3.05 percent, while Sunny Bank (陽信銀行) provides the highest rates for three-month, six-month and one-year yuan deposits at 1.5 percent, 1.55 percent and 1.65 percent respectively.
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