Chinese banks cut saving rates on foreign currencies to record lows amid global coronavirus fallout
- Bank of Communication became the latest Chinese bank to cut saving rates on foreign currencies to close to zero
- Race to cut rates comes as bankers try to deal with an influx of capital from around the world, due to quantitative easing
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.
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.
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Bank of China has cut saving rates on the US dollar from 0.05 per cent to 0.01 per cent, while deposit rates on the British pound went from 0.05 per cent to just 0.01 per cent. The saving rate on the Australian dollar has also been cut to 0.01 per cent from 0.05 per cent this month. Saving rates for a one-year fixed term deposit on the Japanese yen and the euro is now close to zero, plunging to 0.0001 per cent from 0.01 per cent.
“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.”