Chinese banks boost dollar deposit rates as Beijing seeks to smooth yuan rally
FXI•More than six Chinese banks have raised dollar deposit rates, with some state-bank rates up about 120 basis points in recent months and one-year offers above 4%. The higher yields may encourage exporters and savers to keep dollars rather than convert them into yuan.
1. Rates climb sharply
More than six Chinese state-owned, joint-stock and foreign banks have recently raised dollar deposit rates to levels not seen since at least 2023. At one state bank, rates rose about 80 basis points to as high as 4.5% in late October; another state bank’s one-year rate now exceeds 4% for balances above $50,000, about 120 basis points above levels a few months earlier.
2. Currency pressures
Higher dollar rates may discourage exporters from converting accumulated dollars into yuan, potentially easing pressure from the yuan’s prolonged rise. The yuan has gained about 10% against the dollar since early 2025 and reached a four-year peak of 6.6449 per dollar last week. Major state lenders’ yuan deposit rates are 0.95%.
3. Policy and deposits
Bankers said they were not told why rates were raised, and it was unclear whether policymakers directed the moves. The increases also reflect rising US rates; some Chinese banks are offering dollar deposits above 4%, competitive with rates just below 4% in Hong Kong. Foreign-currency deposits reached a record $1.2 trillion at the end of September, up 17.7% from a year earlier.
