Direct FX exchanges expected across strait

Two days after the Bank of China was appointed to run Taiwan's RMB transactions, a Cross-Strait currency clearing system is getting underway. Some business people are expecting that Taiwan residents will be able to manage their wealth in yuan as early as the lunar Chinese New Year, which takes place in February. One businessman is already waiting in line.

Mao Renjie, Taiwan Businessman, said, "The deposit rate of the RMB can be one percent higher than that of the New Taiwan dollar, and that's the main reason why saving money in yuan is appealing. Besides, the RMB is stable and has the potential to appreciate. For Taiwanese, deposits in RMB are a pretty ideal way to manage their finances ."

Mr. Mao also says that the direct currency clearances could cut administration fees and time otherwise wasted on third-party clearing. Taiwan manufacturers would largely benefit from it since the Chinese mainland runs a trade deficit with Taiwan of up to ninety billion US dollars.

Direct exchanges between the RMB and the New Taiwan dollar are expected to begin once the currency clearance system is ready to take off. Such a move will also reduce production costs of Cross-Strait trades. Individuals on both sides will have less trouble dealing with transactions. Locals in Taiwan are also expecting more RMB financial products, including bonds and denominated funds.