Multiple banks have lowered USD deposit rates! Is it reliable to obtain exchange earnings by exchanging Chinese yuan for US dollars? Deposit | Behavior | Interest Rate

Release time:Apr 14, 2024 01:52 AM

Recently, several major banks represented by state-owned enterprises have lowered their US dollar deposit interest rates, attracting market attention. Why has the US dollar deposit interest rate been lowered? What is the impact? Is it reliable to obtain exchange earnings by exchanging Chinese yuan for US dollars? What is the trend of the RMB exchange rate in the next stage? Let's take a look at this issue Quick Q&A ↓

Q

Why has the US dollar deposit interest rate been lowered?

A: Due to the continuous interest rate hikes by the Federal Reserve and other factors, domestic US dollar deposit interest rates have significantly increased since last year. According to the China Monetary Policy Implementation Report for the first quarter of 2023, the weighted average interest rate for one-year US dollar large deposits in China was 5.67% in March 2023, a year-on-year increase of 4.15 percentage points. The weighted average interest rate for one-year US dollar loans in China during the same period was 5.34%, a year-on-year increase of 3.74 percentage points. The deposit interest rate in US dollars has been significantly higher than the loan interest rate.

Q

What is the impact of the decrease in US dollar deposit interest rates?

A: Against the backdrop of declining deposit interest rates, high US dollar deposit interest rates will increase residents' willingness to hold US dollars. Lowering the US dollar deposit interest rate is conducive to reducing the irrational foreign exchange behavior of enterprises and residents towards the US dollar, and promoting the stability of the RMB exchange rate.

Q

Is it reliable to obtain exchange earnings by exchanging Chinese yuan for US dollars?

A: Recently, the exchange rate of the Chinese yuan against the US dollar has continued to depreciate, with the onshore exchange rate falling below the 7.25 mark and a depreciation of nearly 5% within the year. If RMB is converted into US dollars and then deposited into US dollars, can it earn both high interest rates and exchange gains? Industry insiders remind that this approach carries high risks and may not be worth the loss. The benefits brought by the interest rate difference between RMB deposits and USD deposits are easily offset by exchange rate fluctuations.

The Chief Economist of CITIC Securities clearly stated that due to factors such as the periodic rise of the US dollar index, the current RMB exchange rate is at a relatively low historical level. Although one-year deposit interest rates in the US dollar are at a high level, exchange rate fluctuations one year later may offset the gains caused by deposit interest rate differentials. Therefore, the strategy of simply seeking high returns from US dollar deposits by depositors may not be appropriate. depositors should establish a risk neutral philosophy and manage their US dollar positions reasonably according to their own needs.

Q

What is the trend of the RMB exchange rate in the next stage?

A: The report from the Bank of China Research Institute believes that the RMB exchange rate will gradually stabilize and have the foundation for stability and strength.

One is that the impact of related spillovers is expected to weaken. Although the two-way fluctuation of the RMB exchange rate has increased recently, after the clear signal from the Federal Reserve's interest rate meeting in June, it is difficult for the US dollar index to continue to strengthen, and the phenomenon of "inverted" interest rate differentials between China and the United States will be improved.

Secondly, domestic economic growth will steadily rebound. With the coordinated efforts of macroeconomic policies, the strength of China's economic recovery will be further strengthened, endogenous growth momentum will continue to improve, resident confidence will continue to repair, and the supporting role of the economy in the foreign exchange market will gradually increase.

Thirdly, cross-border capital flows will generally remain stable. The supply and demand transactions in China's foreign exchange market are rational and orderly, with significantly improved resilience. The exchange rate expectation remains stable, the scale of foreign exchange reserves is reasonable and abundant, and the international balance of payments pattern is basically balanced.

Two women were stabbed to death and reported to have committed a crime 4 days before the follow-up visit for schizophrenia. Suspect of a bloody murder case in a Hong Kong shopping mall appeared in court today. Male | Last Friday | Murder case
Two women were stabbed to death and reported to have committed a crime 4 days before the follow-up visit for schizophrenia. Suspect of a bloody murder case in a Hong Kong shopping mall appeared in court today. Male | Last Friday | Murder case

According to Hong Kong's Wen Wei Po, a bloody knife stabbing case occurred at Hollywood Square in Diamond Hill last Friday. The police arrested a 39 year old man on suspicion of stabbing two young women, one of whom was stabbed over 30 times. The suspect appeared in the Kwun Tong Magistrates Court this morning. The police at the Kwun Tong Magistrate's Court temporarily charged the suspect with two counts of murder last Sunday. The suspect appeared in court this morning at the Kwun Tong Magistrate's Court. Acting Chief Magistrate Zheng Jihang, after listening to the opinions of both the prosecution and defense, decided to postpone the hearing for two weeks until 9:30 am on June 19th, waiting for two psychiatric expert reports to be obtained. The defense did not object. Zheng Jihang approved the application, and the defendant needs to be temporarily detained at Xiaolan Mental Hospital. When the suspect appeared in court, he wore black framed glasses, a light gray shirt, and camouflage green shorts, and was able to answer the judge's questions normally. accordingly

Secretary of the Provincial Party Committee: The focus of Henan's "summer harvest" has shifted to agricultural machinery in the northern region of Henan Province. | Support | Science | Organization | Province | Northern Henan | Summer Harvest | Rush Harvest
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Currently, the highly anticipated summer harvest work in Henan has shifted its focus to the northern region of Henan. According to the Henan Daily client, on June 4th, Lou Yangsheng, Secretary of the Henan Provincial Party Committee, presided over a special video scheduling meeting on the "Three Summers" work in the province, listened to the situation report, analyzed and judged the situation, and arranged and deployed the next steps of work. Governor Wang Kai made specific arrangements. On the evening of May 31, 2023, in Xiafutou Village, Xuliang Town, Boai County, Jiaozuo, Henan Province, villagers braved light rain in the wheat fields to harvest wheat. Visual China Map Lou Yangsheng pointed out that the current summer harvest battle in the province has entered the decisive stage. Doing a good job in summer harvest in northern Henan Province is related to the summer grain yield and seed safety. We should focus on seizing opportunities and make every effort to organize the wheat harvesting work in the northern Henan region, minimize losses, and protect the interests of farmers to the greatest extent possible. Accurate forecasting is essential

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The Chinese naval fleet has arrived! Assembly | Navy | Chinese Fleet
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At noon today, a Chinese naval fleet consisting of Zhanjiang and Xuchang ships arrived at the assembly area of the "Comodo-2023" multinational maritime joint exercise. It is understood that the assembly anchorage for this exercise is 3 nautical miles long and 1.5 nautical miles wide, capable of anchoring up to 50 ships. Naval vessels from various countries participating in the exercise will also arrive at the anchorage today to complete the assembly of the "Komodo 2023" multinational maritime joint exercise, which is held every two years by the Indonesian Navy. This year is already the fourth edition of the exercise. The exercise will be held from June 5th to 8th in the city of Jakarta, South Sulawesi Province, Indonesia, including the port and sea phases. In the coming days, participating navies from various countries will participate in ship reading style search and rescue exercises, maritime interception and damage management exercises, aerial exercises, and other course objectives exercises

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