After Chinese New Year, the deposit interest rates for US dollars in some Chinese banks have been slashed from 4.3% to 2.1%, a direct “halving”.
According to the official account of the Financial Department of “Finance” magazine known as “Finance May Flower” on February 12, several Chinese banks have recently adjusted their US dollar deposit rates. A person from a branch of Nanjing Bank in Shanghai stated that starting from February 8, the pricing for their individual US dollar deposit product “Xin Hui Tian” has been lowered to start with the number “2”. Specifically, the three-month term US dollar deposit rate is 2.1%, while the one-year term is set at 2.5%, with a minimum deposit of $3000. Previously, the interest rate for this product was above 4%. The person mentioned, “The rate was lowered last week, and this time it was quite sudden.”
Jiangsu Bank’s US dollar time deposit product “Enjoy Winning Treasure” recently went through a process of being taken offline and then re-listed. The bank’s mobile banking app shows that “Enjoy Winning Treasure” now requires a minimum deposit of $5000, offering a 3% interest rate for one year, 2.7% for six months, and 2.5% for three months. Before the Chinese New Year, the bank’s US dollar deposit rate was still above 4%, with the one-year term starting at $10,000 offering a rate as high as 4.3%.
A person from a branch of Hangzhou Bank in Shanghai introduced that among their US dollar deposit products starting with a minimum of $8000, the interest rates are 3.55% for three months, 3.35% for six months, and 3.2% for 13 months. Prior to February 10, the bank’s three-month US dollar deposit rate was 4.4%.
The report stated that currently, the one-year US dollar deposit rates of several large state-owned and joint-stock banks are around 2.8%; some joint-stock banks offer rates ranging from 0.8% to 2.1%; and a certain city commercial bank in North China has lowered its US dollar deposit rate to as low as 0.35%.
A person from a city commercial bank in East China revealed, “We have already lowered rates several times, almost every two months. At the end of November 2024, the bank’s US dollar deposit rate was still at 4.05%, and now it has dropped below 4%.”
Compared to domestic banks in China, some foreign banks like East Asia Bank and Standard Chartered Bank have not made adjustments to their US dollar deposit rates.
In response, Postal Savings Bank researcher Lou Feipeng believes that since September of last year, the Federal Reserve of the United States has begun to cut interest rates, lowering the federal funds target rate by one percentage point three times. The market has high expectations for further rate cuts by the Federal Reserve, prompting banks to lower US dollar deposit rates to stabilize their debt costs in the face of these reductions.
For customers with excess US dollars looking to invest in time deposits to maintain value, Zhang Zhiwei, Chief Economist of Baojin Assets Management Limited (Hong Kong), believes, “Current US dollar financial products are somewhat attractive.” This is because some financial funds are being directed towards the US bond market, where US Treasury yields are relatively higher and with lower risks. When comparing interest rates on government bonds between China and the US, there exists a significant interest rate differential, making US dollar financial products have certain investment value in the current market environment.
However, industry insiders also caution that considering economic, geopolitical factors, there are risks of fluctuations in the US dollar exchange rate going forward. Investors should comprehensively consider factors such as interest rate fluctuations, exchange rate risks, and actual returns when investing in US dollar products.
In response to this, netizen “Tianyi” speculates, “A decrease from ‘4.3% to 2.1%, some banks slash US dollar deposit rates’—it seems like there are more people holding US dollars or exchanging them?!”
“Charles” stated, “If domestic banks don’t provide high rates, people will deposit their money overseas.”
“kiwirui” also commented, “Banks are clipping the sheep, with rates at 2% domestically, without doing anything, you can get 4% in Hong Kong.”