TAIPEI: Taiwan's central bank is holding Chinese yuan in its foreign exchange reserves portfolio, Governor Perng Fai-nan said on Wednesday, in recognition of the growing globalization of the yuan and importance of trade across the Taiwan Straits.
Trade and financial ties on both sides have gathered steam since last year after a yuan clearing settlement deal was signed. Taiwan aims to become an offshore yuan trading hub, like Hong Kong and Singapore.
"There is a realistic need to do so. China has the biggest forex reserves in the world. Its credit ratings is good," Perng told parliament, saying that central banks of 11 countries have added the yuan to their portfolios.
Mainland China is Taiwan's biggest export market and, according to Perng, cross-straits trade has reached $160 billion.
Some analysts welcomed the inclusion of yuan, also known as the renminbi (RMB), in Taiwan's reserves.
"China is becoming more open in financial markets. RMB will become one of the world's major currencies in the next 10 to 20 years," said analyst Andrew Tsai of KGI Securities in Taipei. "It is better (for Taiwan) to do it sooner rather than later."
The governor declined to give details on the yuan holding's size. Taiwan has the world's fourth-biggest forex reserves, standing at 409.4 billion at end of August.
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