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TAIPEI, March 25 (Reuters) - Taiwan's financial regulator has given permission for Fuh Hwa Securities Investment Trust to set up the first yuan denominated mutual fund on the island, two sources with close knowledge of the planned fund said on Monday.
The fund, which still needs a final green light from the central bank, will be able to raise up to 20 billion yuan (US$3.22 billion) the sources sai. According to one of them it will mainly invest in Hong Kong's Dim Sum bonds, though it will not rule out the possibility of investing in Taiwan's "Formosa bonds".
China and Taiwan signed an agreement in September for the establishment of a clearing system for yuan transactions on the island, setting the stage for local and foreign banks to launch bond issues.
Reporting by Lin Miao-jung; Writing by Faith Hung