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"currently, the interest rates for 3-month, 6-month and 1-year fixed deposits with a minimum deposit of 20,000 us dollars are 4.6%, 4.25% and 3.6% respectively. the shorter the term, the higher the interest rate. last week, there were us dollar fixed deposit products with an interest rate of 5%, but they are no longer available this week. it is expected that the interest rate will be lowered in three months." the wealth management manager of hang seng bank's beijing financial street branch told reporters.

at midnight on september 19, beijing time, the federal reserve announced a 50 basis point cut in its benchmark interest rate. the reporter visited several bank branches in beijing and learned that hang seng bank and china merchants bank had already followed suit and cut their us dollar deposit rates.

some banks cut their us dollar deposit rates

in addition to hang seng bank, china merchants bank also lowered its us dollar deposit rate. a wealth management manager at the beijing branch of china merchants bank said that the current one-year fixed deposit rate of us$50,000 or more is 2.1%, down 0.1 to 0.2 percentage points from last week.

image source: china merchants bank mobile banking app

wealth managers at several banks, including hsbc, icbc, bank of china, citic bank and pudong development bank, said that no adjustments have been made yet.

"we usually update interest rates at the beginning of the month. this month, the interest rates for three-month, six-month and one-year fixed deposits starting from us$20,000 are 4.2%, 3.8% and 3.4% respectively. generally speaking, our three-month and six-month us dollar deposit rates are the highest. for example, the highest us dollar deposit rate in may and june was 5%." the customer manager of hsbc financial street branch told reporters.

unlike some foreign banks, where shorter deposit periods increase interest rates, most chinese banks have higher interest rates as deposits become longer. generally, 1-year and 2-year deposits have the highest interest rates, and most are 2.8%. for example, pudong development bank's 3-month, 6-month, 1-year, and 2-year deposit rates are 2.3%, 2.5%, 2.8%, and 2.8%, respectively.

regarding this phenomenon, account managers of several banks said that because foreign banks directly follow the pace of the fed's interest rate adjustment, the fed's expectations of starting a rate cut cycle have increased, so short-term deposit interest rates are relatively high. chinese banks also consider domestic market conditions, and different banks have different foreign exchange reserve quotas and different willingness to attract us dollar deposits, resulting in a large divergence in deposit interest rates.

it is worth mentioning that before the fed’s rate cut, some banks, such as jiangsu bank, had already reduced their us dollar deposit rates as a precaution. after the rate cut, many banks said they would continue to reduce their us dollar deposit rates.

diversified configuration

account managers of many banks recommend financial products. "compared with us dollar deposits, it is recommended that you buy us dollar financial products. for example, us dollar financial products with a risk rating of pr1 have an annualized yield of about 4%, and can be redeemed at any time. this type of product mainly invests in us dollar deposits and interbank certificates of deposit." said an account manager of icbc beijing jinshu street branch.

the above-mentioned hang seng bank wealth management manager said that in addition to allocating time deposits, it is recommended that investors allocate a certain proportion of wealth management products investing in overseas markets. the annualized yield of such low-risk rated wealth management products is approximately 4%-6%.

however, this type of investment activity is also accompanied by exchange rate risks. a person from a city commercial bank told reporters that in the past, some investors chose to convert foreign currency into investment because they were optimistic about the high returns of us dollar wealth management products, but due to large exchange rate fluctuations, when the investor redeemed the product and converted it back to rmb, the overall return was negative.

wen bin, chief economist of minsheng bank, believes that the fed's 50 basis point rate cut proves that it is more concerned about economic growth and employment rather than inflation. this rate cut is a precautionary rate cut, and subsequent actions will mainly depend on employment. "the economic indicator that has the greatest impact on the fed's policy in the medium and short term is undoubtedly employment, at least the most important indicator of the last two interest rate meetings this year. historically, the pace of precautionary rate cuts is mostly 'small steps and fast running', and the last two actions this year are likely to be 25 basis points each." wen bin said.