Chinese banks cut interest rates for foreign currencies

Three of China’s largest state-owned banks cut interest rates paid on foreign currency deposits, in an effort to track benchmark interest rate cuts but also to combat hording of US dollars, The Wall Street Journal reported. Agricultural Bank of China (601288.SH, 1288.HKG) and Industrial & Commercial Bank of China (601398.SH 1398.HKG) cut interest rates to 0.05% from 0.1% on US-dollar accounts last week. The two banks, along with China Construction Bank (601939.SH, 0939.HKG), also cut rates on euro-denominated accounts in the last two months. China’s other top five banks, Bank of China (601988.SH, 3988.HKG) and Bank of Communications (601328.SH, 3328.HKG), have not cut rates. The rate cuts on dollar accounts could be a move to discourage exporters from stockpiling US dollars or aggressively selling renminbi as the yuan shows signs of weakening. The yuan has fallen 0.9% against the dollar year-to-date, while the value rose 4.7% against the dollar in 2011.