China Banks Lift Dollar Deposit Rates as Yuan Gains
Several Chinese commercial banks have raised interest rates on U.S. dollar deposits to levels near or above the 3.61% Secured Overnight Financing Rate. The move aims to absorb dollar liquidity and slow the pace of yuan appreciation, which has gained over 3% against the dollar this year.
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At least five commercial banks in China raised U.S. dollar deposit rates to levels near or above the 3.61% Secured Overnight Financing Rate on June 5. The move follows the yuan gaining more than 3% against the United States dollar so far this year. Higher rates incentivize holding dollars, potentially cooling the USD/CNH exchange rate to protect export competitiveness.
