6-6-2023 (BEIJING) A self-regulatory body overseen by the central bank in China has issued a request to major state-owned banks to reduce the interest rates on dollar deposits, according to sources familiar with the matter. The move is aimed at bolstering the country’s weakening currency, the yuan.
The sources, who preferred to remain anonymous as they were not authorized to speak to the media, revealed that the new interest rates for dollar deposits of $50,000 and above will be capped at 4.3 percent. The adjustment took effect on Tuesday, with the big banks expected to lower their rates by up to 100 basis points from the previous ceiling of 5.3 percent.
By lowering the interest rates, Chinese authorities hope to incentivize local companies, particularly exporters, to convert their foreign exchange earnings into Chinese yuan. This strategy comes as the yuan has recently reached six-month lows against the US dollar.
The move by the self-regulatory body indicates the Chinese government’s commitment to stabilizing the value of the yuan amidst ongoing economic challenges and fluctuations in global currency markets.
