Chinese yuan-denominated transactions in Taiwan have increased, according to central bank data. Increased business activity is expected to bolster ties between the two Asian economies. Chinese yuan-denominated deposits in Taiwanese banks increased on a month-on-month basis, for the month of July. The move highlights the growing interest in transactions related to the Chinese currency pair that will directly correlate to a rise in trading volumes.
The country’s official banking institute, the Central Bank of the Republic of Taiwan, reported that the balance of yuan-denominated deposits in Taiwan’s domestic banking units (DBUs) and offshore banking units (OBUs) as of the end of July, totaled US$47.64 billion.
Taiwanese banks were permitted by the central bank to carry out yuan-related banking activities in February 2013. Under the approved terms, the 67 DBUs and the 58 OBUs carry out transactions involving deposits, lending and remittances.
As of the end of July, yuan deposits at Taiwanese domestic banking units rose $146 million or 0.38 percent from a month earlier to $39 billion, at the same time transactions in yuan deposits in offshore banking units fell $99.8 or 1.16 percent to $8.4 billion, the banking data showed.
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Taiwan to Become Offshore Centre
Taiwan became the third overseas financial centre to conduct yuan-related transactions. Beijing and Taiwan signed an agreement in August 2012 which would open up traction in the international RMB market.
Taiwn is picking up pace in its CNY offerings. Earlier this year, Taiwanese broker-dealer, Gre Tai Securities Market, planned to roll-out a number of Chinese denominated financial instruments through Eurex Exchange. The deal will allow European and Taiwan firms to offer bonds denominated in Chinese yuan.
The world’s second largest economy, China, has seen its currency evolve over the last thirty years. The domestic cross has seen a number of initiatives by the central bank that have altered its international presence. Chinese corporates and the country’s export business have been a key driver behind the positioning of the pegged currency pair in the global market. The yuan has increased its rankings in the international foray, according to the BIS Triennial FX Survey 2013, it was the ninth most active currency pair.
The news follows on from South Korea’s central bank’s figures published earlier this week, which saw the amount of yuan deposits increase in the Asian nation.