First-8-Month Increase Reaches 95% of Historical Peak, Approaching Record
According to FSC statistics, domestic banks' foreign currency deposit balance reached 17兆518億元 at end-August, continuing to hit a record high. The cumulative increase of 1兆6651億元 from January to August has reached 95% of the full-year record increase of 1兆7584億元 in 2022, leaving the full-year increase only 933億元 short of the historical high. If net inflows continue over the next 4 months, there is a strong chance of setting a new full-year record.
Notably, the book increase in August was only 1068億元, up 0.6% month-on-month, a new low in nearly 7 months, diverging from actual fund inflows. The main reason was the depreciation of the U.S. dollar against the New Taiwan dollar by about 1.9% in the month, which lowered the amount of foreign currency deposits converted into New Taiwan dollars. Measured in U.S. dollar equivalent, the balance reached 5385億 U.S. dollars at end-August, surging by 137億 U.S. dollars from July, the largest August increase on record.
Exports and Corporate Fund Inflows Are Main Drivers
This wave of growth mainly came from corporate funding momentum. With export demand for AI servers and semiconductors remaining strong, overseas revenues and payments from supply chains have been remitted back, driving up banks' foreign currency deposits. The FSC noted that in addition to export payments, freight and commercial trade service income, repatriated overseas investment funds, and corporate operational funding arrangements also pushed up deposit levels. For foreign trade manufacturers, retaining foreign currency funds to pay for raw materials, equipment and other cross-border payments remains a routine operational need.
In terms of bank rankings, the number of banks with foreign currency deposits exceeding 兆元 remained at 6 at end-August. CTBC Bank ranked first with 1兆7752億元, while Mega Bank took second place with 1兆4473億元. E.SUN Bank climbed to 1兆3424億元, surpassing Taipei Fubon's 1兆3017億元 to jump to No. 3. Bank of Taiwan took 5th place with 1兆2903億元, only 114億元 behind Taipei Fubon, while First Bank ranked 6th with 1兆2276億元.
The market is watching whether domestic funds will shift from New Taiwan dollars to U.S. dollar time deposits after the U.S. rate hike in September. The banking industry generally believes the key lies in subsequent changes in the Taiwan-U.S. interest rate spread, and if interest rates on both sides adjust in tandem, a large-scale currency swap wave may not occur. In comparison, export orders, corporate payment receipts and cross-border fund allocation provide more direct support for foreign currency deposits. As the scale expands, banks can increase funding needed for foreign currency lending and extend cross-border cash flow and wealth management services, but converted balances remain subject to exchange rate fluctuations, and whether records can be broken will depend on export momentum and year-end foreign exchange market trends.