SEOUL — The Chinese yuan-linked financial products rose in South Korea ahead of the launch of a market where currencies of the two countries would be traded directly and the implementation of a bilateral free trade agreement (FTA).
Shinhan Bank, one of South Korea’s four leading banks, said on Nov 20 that it rolled out the yuan deposit product, named China Plus Time Deposit. It has five maturities, including one month and a year, and the deposit rate was set at 3.15 percent.
Hana Bank and Korea Exchange Bank launched a joint yuan deposit product with a maturity of six months and a year earlier this month. The deposit rate was more than 3 percent.
The yuan deposit rate almost doubled the rate of the South Korean won-denominated deposits offered by local banks. The won deposit rate stays at a mid- to upper-bound of 1 percent.
The rise in yuan-related financial products came as the two countries are expected to implement the bilateral FTA next year. South Korea plans to launch the direct trading market between the yuan and the won within this year.
A South Korean news media reported that the financial regulator plans to increase the portion of yuan settlement in trade with China to 20 percent in the long term.
In 2013, South Korea and China traded 228.8 billion U.S. dollars of goods and services, among which 1.2 percent was settled with the Chinese yuan.