Effective today, the People's Bank of China is raising the ceiling on the one-year US dollar deposit rate by 0.25% to 1.125% and the one-year Hong Kong dollar deposit rate by 0.1875% to 1%, applicable to deposits under US$3m, according to media reports. Though the central bank did not cite a reason for the move, analysts say it was a response to rate increases by the US Federal Reserve and other foreign central banks. Some have suggested that the PBOC wants to take the appreciation pressure off the yuan by making foreign currency deposits more appealing than exchanging them for yuan.
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