Chinese currency deposits in Taiwan may top 300 bil. yuan
February 8, 2014, 12:06 am TWN
TAIPEI -- Chinese yuan-denominated deposits in Taiwan are expected to surpass 300 billion yuan (US$49.5 billion) by the end of this year, representing an annual increase of 64 percent, DBS Bank forecast Friday.
The Singapore-based banking group said the forecast was based on the fact that yuan-denominated deposits in Taiwan increased by about 14 billion a month last year after Taipei lifted a ban on Chinese currency transactions in early February 2013.
Many Taiwanese investors favor the yuan because they anticipate that it will depreciate further against the U.S. dollar, according to the bank.
Banks operating in Taiwan tend to offer higher interest rates on yuan deposits than on Taiwan dollar accounts, which has lured customers to park their money in yuan accounts, DBS Bank said.
According to the local central bank, yuan-denominated deposits in Taiwan's banking system totaled 182.6 billion yuan as of the end of 2013.
Yuan deposits in domestic banking units amounted to 138.22 billion yuan last year, and in offshore banking units 44.38 billion yuan, the central bank said.
With China's economic growth remaining strong and its economy facing inflationary pressure, its central bank is likely to implement a ate hike cycle sooner than in other countries, according to DBS Bank.
It said higher interest rates on the yuan are expected to boost the value of the currency and spur more investors to put their funds into yuan-denominated assets.