Overview
- Several state-owned and joint-stock banks raised interest on US dollar deposits in early June, according to multiple banking sources and market reports.
- Some banks are offering rates at or above the US Secured Overnight Financing Rate, which sits around 3.61 percent, to make holding dollars more attractive than converting them into yuan.
- There has been no public confirmation from the People’s Bank of China, and reporting describes the change as a discreet regulatory relaxation rather than a formal policy announcement.
- The tactic is aimed at keeping export dollars parked in domestic accounts so fewer dollars are converted to yuan, which eases upward pressure on the currency and protects exporters’ price competitiveness.
- The shift reverses a 2023 ceiling on dollar deposit rates and comes as foreign-exchange deposits in Chinese banks reached about $1.15 trillion at the end of April, up roughly 20 percent year on year.