China’s major state banks are cutting rates on foreign currency deposits to record lows as global interest rates enter negative territory on the back of monetary easing to counter the economic impact from coronavirus pandemic, reported the South China Morning Post.
Bank of Communications became the latest Chinese bank to cut saving rates on foreign currency deposits over the weekend, on deposits below $3 million from September 26. The bank’s announcement followed similar cuts this month by China’s-owned peers Bank of China, Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China.
The saving rate on the US dollar is now 0.01%, while all the aforementioned banks are offering 0.35% on a one-year fixed term deposit, currently the highest available saving rate on the dollar.
“Deposit rates for foreign currencies are already very low,” said Hao Zhou, senior economist at for emerging markets at Commerzbank in Singapore. “It may help [lower] overall funding cost in [foreign currencies] onshore in China.”