Overview
- Multiple commercial lenders, including state-owned and joint-stock banks, raised U.S. dollar deposit rates in recent weeks to make holding dollars in China more attractive.
- Some banks are quoting rates around or above the U.S. Secured Overnight Financing Rate, which currently stands near 3.61 percent.
- Banks and traders say the move aims to soak up dollar balances from exporters and other firms so fewer dollars are converted into yuan and the currency’s rise eases.
- The People’s Bank of China has not publicly confirmed any formal guidance and the adjustments appear to be a quiet, bank-level tool rather than a signed policy change.
- The step reverses earlier 2023 caps on dollar deposit yields and comes as onshore foreign-exchange deposits reached about $1.15 trillion at the end of April, a level that can meaningfully affect FX flows and liquidity.