August 8, 2014 / 3:00 AM / 4 years ago

South Korea yuan bank deposits rise to record $16.2 bln in July

SEOUL, Aug 8 (Reuters) - Deposits of Chinese yuan rose in July by the biggest amount on record to $16.2 billion as foreign banks in South Korea ran campaigns to entice investors into yuan deposits, central bank data showed on Friday.

Yuan deposits grew a record $4.2 billion in July - a 13th straight gaining month.

Thanks to the boost in yuan holdings, foreign exchange deposits in banks nationwide rose to a record $62.5 billion in July, up $3.5 billion from the previous month.

Yuan deposits have been on the rise in South Korea since early this year after authorities decided to allow banks to freely manage deposits, just a few months after warning Chinese banks in South Korea to refrain from increasing yuan deposits.

A Bank of Korea official also said a recent bump in interest rates offered by Chinese banks had spurred yield-seeking investors to invest more in the yuan.

Meanwhile, U.S. dollar-denominated deposits fell by $0.4 billion to account for 64.5 percent of all foreign currency deposits at end-July, compared to the yuan’s 25.9 percent, the data showed.

The central bank said corporate foreign exchange deposits had gained by $3.7 billion in July to $56.4 billion whereas deposits owned by private investors fell $0.2 billion to $6.0 billion. The numbers have been rounded.

Reporting by Christine Kim; Additional reporting by Yena Park; Editing by Eric Meijer

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