Recently,several banks in China,including Jiangsu Bank,Nanjing Bank,and Beijing Bank,have begun to reduce their dollar time deposit rates.As a journalist investigating this trend,I noticed a surprisingly diverse picture across the banking sector.While notable reductions were observed,many banks still offer rates surpassing 4% for dollar time deposits.This includes both domestic banks like Guangdong Huaxing Bank,Chongqing Bank,and Ningbo Tongshang Bank,and foreign institutions such as Nanyang Commercial Bank,DBS Bank,Standard Chartered Bank,and Bank of East Asia.

Zhao Wei,a researcher from Puyi Standard,shared insights regarding the potential trajectory of dollar time deposit rates.According to Zhao,it’s expected that the overall trend for these rates could continue on a slow downward path into 2025.One factor behind this expectation is the prevailing market sentiment that the Federal Reserve’s interest rate-cutting cycle has not yet concluded.Even though the pace of these cuts might slow,the overall trend suggests a gradual decline in rates.Additionally,as China’s market reforms move toward interest rate liberalization,banks are becoming increasingly adept at managing their liabilities,thereby enhancing their flexibility in adjusting deposit rates.

Divergence in Dollar Deposit Rates

In my visits to various bank branches,I identified several small and medium-sized banks maintaining competitive dollar deposit rates that exceed 4%.For instance,Guangdong Huaxing Bank offers an annual interest rate of 4.25% for 1-month and 3-month dollar time deposits,and 4.3% for 6-month and 1-year deposits,with a minimum deposit requirement of $1,000.Meanwhile,Chongqing Bank’s minimum for dollar time deposits is $5,000,with interest rates set at 4.3%,4.35%,and 4.25% for 3-month,6-month,and 1-year terms,respectively.A customer manager at Chongqing Bank mentioned that adjustments to these rates typically occur monthly,though the timing remains uncertain.

Huashang Bank,under the umbrella of Industrial and Commercial Bank of China (ICBC),is also notable for its attractive dollar time deposit offerings,featuring low minimum deposit thresholds.A client manager for the bank reported that their annual rates for 1-month,3-month,and 6-month deposits stand at 4.0%,4.1%,and 4.15%,respectively,with a minimum deposit of merely $50.

Additionally,Ningbo Tongshang Bank has introduced a personal dollar time deposit product suitable for both ordinary and private banking clients.For regular clients,the minimum deposit is also set at $1,000,with annual rates of 4.2% and 4.1% for 6-month and 1-year terms,respectively.

The bank's financial manager elaborated that their private banking products demand certain asset thresholds; specifically,clients’ daily assets must not fall below 3 million yuan,with a minimum deposit requirement of $10,000 for these higher-yield offerings.The rates for private clients' 6-month and 1-year deposits are slightly elevated at 4.3% and 4.2% respectively.It's noteworthy that each of these dollar time deposit products comes with a specific issuance quota that,once exhausted,requires clients to wait for the next issuance cycle.

Foreign banks also contribute to this competitive rate environment,with offerings exceeding 4% from institutions such as Nanyang Commercial Bank,Bank of East Asia,Standard Chartered,and DBS Bank.According to a financial manager from Nanyang,their products require a minimum deposit of $10,000,with a 4.4% annual rate for 3-month deposits.They also have a 6-month dollar time deposit product available at $10,000,currently offering an annual rate of 4.2%.Comparatively,East Asia Bank demands a slightly higher initial deposit of $20,000,and on February 11,they announced a new dollar time deposit rate schedule of 4.25%,4.3%,and 4.4% for 3-month,6-month,and 12-month terms.

For clients looking to purchase dollar time deposit products with a rate higher than 4% at Standard Chartered Bank,two requirements must be met: the total deposit and investment at the bank must exceed 500,000 yuan (or equivalent in foreign currency),and the minimum deposit must be $40,000 in new funds.If these criteria are satisfied,clients can benefit from advertised annual rates of 4.4% for 1-month and 3-month terms,and 4.2% for 6-month deposits.In comparison,DBS Bank imposes even stricter requirements,necessitating a $50,000 minimum deposit along with a total asset holding of 1 million yuan.

Interestingly,unlike foreign banks,most domestic banks have not imposed any asset requirements on their clients for dollar deposits.Except for Ningbo Tongshang Bank,which requires certain asset conditions for its private banking services,other domestic banks are placing fewer restrictions on depositors,welcoming both new and existing funds.

Expectations for Gradual Decline in Dollar Deposit Rates

Following the recent Spring Festival holiday,banks began to lower their dollar time deposit rates steadily.A client manager at Jiangsu Bank informed that from January 22 to February 7,dollar deposits were categorized into two Initial deposit brackets of $2,000 and $10,000.For the $10,000 tier,annual interest rates remained above 4% across all terms until abrupt notifications arrived that the rates were set to drop significantly.By February 9,when the product relaunch occurred,the initial requirement changed to only one category at $5,000,with rates plummeting to 2.5%,2.7%,and 3% for terms of 3 months,6 months,and 1 year respectively.

Nanjing Bank also followed suit,reducing their Xinhui Tian personal dollar deposit rate from 4.3% down to 2.1% for a 3-month term,while 1-year rates adjusted from 4.0% to 2.5%,with a minimum opening amount of $3,000.

Moreover,I found that both Beijing Bank and Dongguan Bank had lowered their dollar deposit rates below 4%.A client manager from Beijing Bank reported that their current products for dollar deposits exhibit rates of 3.0%,2.7%,and 2.5% for 1-year,6-month,and 3-month durations with a minimum $5,000 required.This manager remarked that the recent adjustments reflected a downward trend that sparked notable disparities from previous offerings,where 6-month rates still topped 3.0%.

Similarly,a client manager from Dongguan Bank disclosed that their dollar deposit rates had also seen a consistent decline.The new rates for 3-month,6-month,and 1-year products stand at 3.8%,3.7%,and 3.6%.

As Zhao Wei noted,the primary motivations driving these bank decisions to lower dollar deposit rates are twofold.Firstly,the economic climate influenced by the Federal Reserve initiating its interest rate-lowering cycle in September 2024 has prompted a general decrease in dollar interest rates.In a bid to decrease liability costs and maintain profit margins,banks have responded by reducing their rates correspondingly.Secondly,with the renminbi remaining stable and enhanced demand for yuan assets,bolstered by advancements in AI-driven tools like DeepSeek,there is a growing inclination towards diversifying into yuan-denominated investments,creating downward pressure on the attractiveness of dollar assets.This shift in market dynamics could lead banks to revisit their dollar deposit rates in response.

Looking forward,will more banks continue to adjust their dollar time deposit rates downward?Zhao Wei expressed a belief that this trend is likely to persist.As the Federal Reserve continues its rate cuts and the pressure from dollar funding expenses lessens,banks may feel increasingly compelled to lower their dollar deposit rates.This move aims to optimize capital allocation and enhance operational efficiency further.Additionally,banks that previously attracted a significant amount of dollar deposits through higher interest rates will also reconsider their strategies,especially in light of heightened currency management challenges and uncertainty in dollar asset profitability.Consequently,these banks may proactively lower their dollar time deposit rates to manage costs and better navigate a complex foreign exchange market environment.

In conclusion,Zhao predicts that by 2025,the overall trend for domestic banks’ dollar time deposit rates may indeed continue to reflect a gradual decline.As the Fed’s easing measures evolve and with a progressive approach towards domestic interest rate reforms,banks are likely to prioritize rational asset-liability management over merely attracting deposits through high interest rates.This shift will help ensure sustainable development while maintaining stable operations,indicating a slow downtrend for dollar deposit rates will likely characterize the coming years.