Source of this article: Times Weekly Author: Xia Zixuan
On September 27, the Central Bank of authorized the China Foreign Exchange Trading Center to announce that the interbank foreign exchange market RMB exchange rate mid-price is 1 US dollar to 7.0722 yuan, a 424 basis points lowered, setting a new low since June 30, 2020.
RMB depreciates, and US dollar financial products have attracted more attention.
According to the foreign exchange deposit interest rate table released by the four major banks, the US dollar current deposit deposit is only 0.05%, and the annual interest rates of 1-month, 3-month, 6-month, 1-year and 2-year US dollar whole deposit and withdrawal products are 0.2%, 0.3%, 0.5%, 0.8% and 0.8% respectively. Whether it is current deposits or fixed deposits, they are significantly lower than the RMB deposit interest rate of the same period.
USD appreciates. Are there more people who exchange RMB for USD to obtain appreciation returns from USD, or switch to USD financial products? Banking industry insiders told the Times Weekly reporter that this depends on the demand for foreign exchange use in the future period. If you have plans to study or travel abroad, you can continue to hold US dollars and purchase US dollar financial products; if there is no need to use US dollars, in terms of yield, RMB financial products is better than US dollar financial products.
However, holding US dollar assets requires the potential risk of fluctuations in exchange rate . Liu Yinping, an analyst at Rong360 Digital Technology Research Institute, believes that if the US dollar exchange rate rises, the yield rate of US dollar wealth management products will also rise; on the contrary, if the US dollar depreciates against the RMB RMB , the yield rate of US dollar wealth management products will also fall accordingly. Although this possibility is not great in the short term, there is still uncertainty in its long-term trend.
USD deposit interest rate level is low
Times Weekly reporters found that at present, the yield rate of bank dollar deposits and wealth management products is relatively low, and the number of products is also small.
From the perspective of US dollar deposit interest rate, most banks have less than 1% interest rates for one-year fixed deposit products. For example, the annual interest rates of US dollar deposits and withdrawal products with the four major periods of 1 month, 3 months, 6 months and 1 year are the same, all of which are 0.2%, 0.3%, 0.5%, and 0.8%, respectively. Everbright Bank , Industry Bank and other shares have a 1-month, 3 months, 6 months and 1-year annual interest rates for US dollar deposits and withdrawal products, which are 0.05%, 0.15%, 0.25% and 0.35%, respectively.
Compared with RMB deposit interest rates, the US dollar deposit interest rate level is generally low. On September 15, most domestic banks lowered the RMB deposit interest rates, and the RMB deposit interest rates for the four major periods of 3 months, 6 months and 1 year fell to 1.25%, 1.45%, and 1.65%, respectively. The RMB deposit interest rates for the 3 months, 6 months and 1 year of Minsheng Bank and other shares fell to 1.3%, 1.55%, and 1.85%, respectively. Against the backdrop of interest rate cuts, the RMB deposit interest rate is still at least 0.8 percentage points higher than the US dollar deposit interest rate.
Source: TuChong Creative
From the perspective of US dollar wealth management products, the interest rates of US dollar wealth management products launched by various banks are slightly higher than those of deposits, but most of the expected annualized returns of wealth management products within one year are lower than 2%.
For example, Bank of China , a "USD Structured Deposit 22154" with a term of 98 days, the starting point is US$2,000, and the expected annualized rate of return is between 0.9% and 1.1%; Industrial and Commercial Bank of China has a 355-day "personal foreign currency structured deposit product" with a 355-day start point of US$2,000, and the expected return is between 1.2% and 1.5%; Everbright Bank's 6-month "Foreign Currency T Plan 22 Years and 2 Periods" with a 6-month start point of US$1,000, and its performance is 1.8% compared with benchmark interest rate.
It should be noted that the above-mentioned US dollar financial products are linked to the spot exchange rate of US dollar , that is, the exchange rate is maintained within the specified trading range to obtain profits. For example, the "USD Structured Deposit 22154" of Bank of China is linked to the spot exchange rate of the Australian dollar against the US dollar. During the observation period, the pegging indicator can only obtain a 1.1% yield if it is lower than or equal to the observed level, otherwise it will obtain a 0.9% yield.
"Foreign exchange-linked financial management products have investment risk and should not be regarded as general fixed deposits or their substitutes." A joint-stock bank staff told the Times Weekly reporter that the currency invested by US dollar wealth management is US dollar, and when you exchange it back to the RMB, you should also pay attention to exchange rate fluctuations and bear losses.
Exchange rate fluctuations affect financial returns
The exchange rate trend of the RMB against the US dollar has also attracted much attention from investors.
Since this year, Feder has raised interest rates for five consecutive times, reaching 300 basis points. On September 21, the Federal Reserve raised interest rates by another 75 basis points, increasing the target range of the federal funds rate to 3.00% to 3.25%, the largest intensive interest rate hike since 1981.
As the Federal Reserve continues to raise interest rates, the dollar index remains strong. On September 27, data from the China Foreign Exchange Trading Center showed that the central price of the RMB against the US dollar was 7.0722, a 424-point cut. In addition, the US dollar index rose significantly on the 26th. The dollar index, which measures the dollar against six major currencies, rose 0.81% on the day and closed at 114.1030 at the end of the foreign exchange market.
"The US dollar exchange rate trend has great volatility and uncertainty." Zhou Maohua, a macro researcher at the Financial Markets Department of Everbright Bank, said that for ordinary investors, investing in US dollar products should not only focus on interest rates, but also pay attention to the risk of US dollar exchange rate fluctuations. It is recommended to adjust investment strategies and portfolios based on domestic macroeconomic and policy environment.
"If the rate of return of investors investing in US dollar wealth management is 4%, and the RMB exchange rate against the US dollar appreciates by 5%, investors will lose instead of making a profit." A financial planner from a wealth management company in Guangzhou told the Times Weekly reporter that investors need to pay an additional handling fee to exchange US dollars for RMB. This handling fee is not directly charged by the bank, but is collected through exchange rate difference.
Take Bank of China as an example. According to the bank's latest foreign exchange price on September 27, the bank will need about RMB 71,798 to buy US$10,000, but it will sell US$10,000 cash exchange to the bank, and can only exchange RMB about RMB 71,495, which is a 300 yuan difference. If you sell US$10,000 in cash to the bank, you can only get RMB 70,914, and the price difference is even more than RMB 800. How does the RMB exchange rate move under the top US dollar in
html? Chief economist Wen Bin believes that from the perspective of my country's economic fundamentals, it is expected that the growth rate of GDP in the third quarter will rebound significantly compared with the second quarter. The inflation level is moderate and controllable, and the balance of payments is good. In particular, basic balance of payments projects such as current accounts and direct investment will maintain a high surplus, laying the foundation for the stable exchange rate of the RMB and the stable operation of the foreign exchange market. There is no foundation for the RMB to depreciate continuously.Zhao Qingming, deputy director of the China Foreign Exchange Investment Research Institute, said that the US dollar index has broken through the 110 mark many times and has hit a 20-year high. It can be said that the space for the US dollar index to further rise in the future is already very limited. It is very unwise to continue betting on the sharp decline of the RMB at this time. From a fundamental perspective, the relative strength and weakness pattern of the RMB and the US dollar may reverse at any time.
