China-Singapore Jingwei, December 23 (Wei Wei, intern Gao Xuan) Since the beginning of this year, the interest rate of RMB deposits has been continuously lowered, while at the same time, the US dollar deposit interest rate has continued to rise.
Recently, Sino-Singapore Jingwei consulted major bank outlets in Beijing and found that the one-year US dollar deposit interest rate at some bank outlets has exceeded 5%. What happened to the USD deposits? What issues should ordinary savers pay attention to when purchasing U.S. dollar deposits?
Source: Baotu.com
The annual interest rate on U.S. dollar deposits in some banks exceeds 5%
In the context of the Federal Reserve raising interest rates , the interest rates on U.S. dollar deposits have also risen. In early July this year, the annual interest rate on U.S. dollar deposits in various banks was still 2.5%-3%. In October, it was raised to 4%. Now many banks have raised the annual interest rate to 5%.
html On the 22nd, Sino-Singapore Jingwei consulted a Beijing branch of the Industrial and Commercial Bank of China as a customer. An account manager said that the bank has a product called "Huixin Deposit" for US dollar deposits, with different interest rates depending on the minimum deposit amount. Taking a one-year term as an example, the annual interest rate is 4.8% for a deposit amount of US$8,000 to US$30,000, 4.9% for a deposit of US$30,000 to US$100,000, and 5% for a deposit of US$100,000 or more. "This is a new adjustment in November. I have not received any notice of adjustment recently. This (interest rate) is the same in the Beijing area." said the above-mentioned account manager.According to an account manager of a Beijing branch of the Bank of Communications, the bank's U.S. dollar deposit interest rate still maintains the interest rate set in November. The annual interest rate for deposits from US$3,000 to US$30,000 is 4.9%, the annual interest rate for deposits from US$30,000 to US$100,000 is 5%, and the annual interest rate for deposits above US$100,000 is 5.1%.
An account manager of a branch of Industrial Bank in Beijing said that the bank’s one-year U.S. dollar deposit interest rate is 4.9%-5%, and the six-month U.S. dollar deposit rate is 2.42%-3.02%. At the same time, different minimum deposit amounts correspond to different interest rates. The higher the amount, the higher the interest rate.
In addition to state-owned banks and joint-stock banks, the annual interest rate on U.S. dollar deposits in some city commercial banks can also reach 5%. As a customer, Sino-Singapore Jingwei consulted some branches of Bank of Beijing and Bank of Nanjing in Beijing. The account managers all said that the annual interest rate for one-year deposits starting from US$10,000 is 5%.
Bank of Nanjing Xinhuitian personal U.S. dollar deposit pricing starting from November 23 Source: Bank of Nanjing official website
According to the account manager of a Beijing branch of Bank of Ningbo, the bank's one-year U.S. dollar deposit interest rate is divided into three levels, the annual interest rate for less than 10,000 U.S. dollars is 4.9%, the annual interest rate for 10,000 to 50,000 U.S. dollars is 5%, and the annual interest rate for more than 50,000 U.S. dollars is 5.2%. "The bank's US dollar deposit interest rate data will change every week, and the above data will be retained until December 25." The account manager said.
A poster released by the Bank of Jiangsu Shanghai Branch also shows that the bank's one-year annual interest rate for a minimum deposit of US$10,000 is 5%, and the one-year annual interest rate for a minimum deposit of US$2,000 is 4.8%.
Source: Bank of Jiangsu Shanghai Branch WeChat public account
Some banks still maintain the listed interest rates
During the interview, Sino-Singapore Jingwei found that the US dollar deposit interest rates of most banks’ branches in Beijing have increased based on the listed interest rates. Taking 1-year U.S. dollar deposits as an example, the listed interest rate of most banks is 0.80%. The annual interest rate for Agricultural Bank of China’s USD 10,000 deposits in Beijing is 4.3%; the annual interest rate for Construction Bank’s Beijing region’s USD 10,000-50,000 is 3.4%, the annual interest rate for USD 50,000-100,000 is 3.6%, and the annual interest rate for USD 100,000 and above is 4%.
An account manager of a branch of China Everbright Bank in Beijing said that new interest rates for U.S. dollar deposits are announced every week. They previously reached 4.9% and 5%, but were later adjusted. This week, the annual interest rate for a one-year term of $2,000 to $50,000 is 4.5%, the annual interest rate for $50,000 to $100,000 is 4.6%, and the annual interest rate for $100,000 and above is 4.7%.
According to an account manager of a Beijing branch of Bohai Bank, the interest rates on U.S. dollar deposits have fluctuated greatly. In the past few weeks, the U.S. dollar deposit interest rates of various banks could reach around 5%. However, the fluctuations have stabilized recently and started a downward trend. The bank's current annual interest rate for deposits with a one-year term of more than 10,000 U.S. dollars is 4.55%. If the deposit reaches more than 500,000 U.S. dollars, you can separately apply for an increase on the basis of 4.55%.
However, there are also banks whose U.S. dollar deposit interest rates have not followed suit. For example, the account managers of China Merchants Bank and Hua Xia Bank branches in Beijing all said that their U.S. dollar deposit interest rates are the listed interest rates, and the annual interest rates on 1-year U.S. dollar deposits are mostly lower than 1%.
Pay attention to these when saving US dollars
Why will the US dollar deposit interest rate continue to rise this year? Liu Yinping, an analyst at Rong360 Digital Technology Research Institute, analyzed that the foreign currency deposit interest rate is related to the interest rate level of the currency location. Since the beginning of this year, the Federal Reserve has raised interest rates multiple times . The US dollar interest rate has continued to rise, and the US dollar deposit interest rate has also risen sharply. The US dollar deposit interest rate of some banks has exceeded the RMB deposit interest rate.
Pan Helin, a researcher and co-director of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, told Sino-Singapore Jingwei that the Federal Reserve has raised the federal funds interest rate to 4.25% - 4.5%. The market interest rate is generally higher than the benchmark interest rate, and the market generally expects that the Federal Reserve interest rate will increase in the future. The one-year deposit interest rate of 5% is a reasonable capital price for banks.
"The U.S. dollar deposit interest rate will continue to rise, but the extent of the increase may be limited. The final interest rate of the Federal Reserve may be 5.1%, so the U.S. dollar deposit interest rate will exceed 5% in the future." Panhelin said.
But it is not necessarily cost-effective to exchange RMB into US dollars for high interest rates. The first thing to consider is the transaction cost of converting US dollars. There is a certain price difference between the bank's buying and selling of US dollars. Taking the Bank of China foreign exchange price at 14:22 on December 23 as an example, the US dollar spot exchange selling price is 700.54. This price is the price at which the bank sells US dollars to customers, that is, the price for individuals to purchase US dollars. The price, that is, buying 100 US dollars requires 700.54 yuan; and the spot purchase price of US dollars is 697.59. This price is the price at which an individual sells US dollars to a bank. That is, 100 US dollars can be exchanged for RMB only 697.59 yuan, and the difference between the two is 2.95 yuan.
Another thing to consider is the fluctuation of the exchange rate of and . Liu Yinping emphasized that there are two issues that need to be paid attention to when buying U.S. dollar deposits. One is whether the Federal Reserve will continue to raise interest rates. If the Federal Reserve raises interest rates, the U.S. dollar deposit interest rate will increase accordingly; the second is the trend of the U.S. dollar against RMB exchange rate . The appreciation of the U.S. dollar is more beneficial to savers who purchase U.S. dollar deposits.
Source: Photo by Sino-Singapore Jingwei
In the past two months, the exchange rate of RMB against the US dollar has risen rapidly. Looking at the central parity rate of RMB against the U.S. dollar, the lowest point on November 4 was 7.2555, but on December 23, the central parity rate was 6.9810. This means that the same exchange of 10,000 U.S. dollars would cost about 72,555 yuan on November 4, but now it only costs about 69,810 yuan. In less than two months, a loss of 2,745 yuan has been made.
At present, the market generally believes that the space for continued depreciation of the RMB is limited. China Everbright International's research report believes that China's current corporate production and operations and household consumption activities are steadily returning to normal development, and the Federal Reserve has begun to slow down the pace of interest rate hikes, which is good for the prospects for RMB appreciation. The fundamentals of China's economy remain solid, providing huge support for the RMB. It is expected that the RMB exchange rate against the US dollar will be well supported between 6.6 and 6.7 in 2023.
According to Pan Helin, from the perspective of speculative capital, capital pursues higher yields . Currently, the Federal Reserve is raising interest rates, U.S. dollar interest rates are rising, and the U.S. dollar is appreciating. U.S. dollar deposits are indeed a good investment method. However, it should be noted that high inflation in the United States often means that the economy has entered an overheating stage and economic volatility has increased. Economic fluctuations are likely to occur in the next 1-2 years, and interest rates will quickly return to zero interest rates.
In addition, Pan Helin said that from the perspective of industrial capital , currency corresponds to the current economic situation. A lot of industrial capital has stayed in countries with development potential, such as China. Industrial capital has not left because of interest differentials because in terms of economic fundamentals, China has more development potential and is more stable than the United States. Therefore, holding currency should be linked to the economic development trend of the country corresponding to the currency.
Recently, State Administration of Foreign Exchange deputy director and spokesperson Wang Chunying said that recently, the international economic and financial situation and the monetary policy expectations of major developed economies have seen marginal changes, the U.S. dollar exchange rate has fallen from its high level, and the related spillover effects have eased.As China better coordinates epidemic prevention and control with economic and social development, and a package of policies and subsequent measures to stabilize the economy are fully implemented and effective, the economy is expected to continue to stabilize and improve, which will further boost market expectations and confidence. At the same time, China's stable international balance of payments structure and enhanced internal resilience of its foreign exchange market will also help China's foreign exchange market maintain smooth operation. (For more report clues, please contact Wei Wei, the author of this article: vivi1257@163.com) (Sino-Singapore Jingwei APP)
(The opinions in this article are for reference only and do not constitute investment advice. Investments are risky, so be cautious when entering the market.)
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Editor in charge: Luo Kun
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