From July 4, the Chinese yuan will be legally tradable in Taiwan for the first time in more than five decades, as part of a liberalisation policy that allows mainland tour groups to visit the island directly. The Taiwanese parliament revised the law to allow exchange of up to 20,000 yuan (HK$22,688) for Taiwan dollars. Eight local banks, including Bank of Taiwan, Land Bank of Taiwan and Mega International Commercial Bank, are authorised to operate the trade. Banks are eager to secure supply of the yuan, as the trade could mean NT$24 billion (HK$6.16 billion) of profit annually. 'We will buy as much as we can get as soon as the central bank announces the implementation regulations,' said an executive of Taiwan Cooperative Bank. Sources at the Bank of Taiwan and the Land Bank said they had already secured up to 30 million yuan through HSBC and Bank of America for transactions next month. Tsai Ching-nian, president of the Land Bank, said lender's 60-odd branches around the island would provide the exchange service from next month. 'Actually, it is a straight exchange service in the initial period, and we won't be able to earn much,' he said. But other bank officials said there would be at least a 20 Taiwan cents gain through exchange-rate differences, and if there were a service charge of NT$100, the profit would be much bigger. So far, the eight banks have yet to reveal their exchange rates and other charge details, saying they need to wait for the announcement of the implementation regulations. According to black market rates, the buying price is about NT$4.30 for one yuan, while the selling price is about NT$4.50. Lucrative profit has led to the mushrooming of the black market trade in Taiwan, as many mainland-based Taiwanese businessmen have looked to the black market for cash trade. 'We are able to trade an equivalent of up to NT$500,000 a month,' said an operator of a Taipei jewellery shop, trading illegally. Earlier this month, Taiwanese authorities cracked down on a major underground exchange ring in the southern city of Kaohsiung and arrested more than 10 people. It was found the ring had traded more than NT$3 billion worth of yuan in the past two years. Lin Wu-hsiung, president of a jewellery industry association, recently asked the government to allow local jewellery shops engage in yuan trading, saying it would help stamp out black market trade. But to start with, local banks' yuan trade is likely to have a minimal impact on the black market as each individual is limited to 20,000 yuan. Anyone with proper identification documents will be able to buy and sell up to 20,000 yuan.