Los bancos Chinos recortan los intereses a los depositos en moneda extranjera. La medida evitara que el yuan se siga devaluando.
BUSINESSAugust 24, 2012, 2:10 a.m. ET
China Banks Cut Foreign Deposit Rates
By SHEN HONG And WYNNE WANG
SHANGHAI—Some of China's major state-run banks recently lowered interest rates on onshore foreign-currency deposits, a move seen as tracking earlier cuts in domestic interest rates but also one aimed at alleviating the growing depreciation pressures on the yuan.
The outlook for the once-robust Chinese currency has deteriorated sharply in recent months as the world's second-largest economy slows further and speculative capital starts fleeing the country.
The banks' move also comes as Chinese exporters have shown a stronger appetite for holding the U.S. currency onshore, instead of converting it into the yuan, which has flooded banks with dollar deposits and driven down the currency's local borrowing costs substantially.
Industrial & Commercial Bank of China Ltd. 601398.SH 0.00% and Agricultural Bank of China Ltd. 1288.HK -0.97% both cut their interest rates on U.S. dollar demand deposits to 0.05% from 0.1% previously, effective Aug. 22.
The two, along with China Construction Bank Corp., 0939.HK -1.87% have also cut their euro deposit rates in the past two months.
It is still unclear whether the other two of China's top five banks—Bank of Communications Co. 601328.SH -0.46% and Bank of China Ltd. 601988.SH 0.00% —will follow suit.
The lowered rates make it less attractive for investors to place deposits in foreign currencies, hence discouraging them from selling the yuan aggressively in the foreign exchange market.
"We have noticed the recent decrease in yuan deposits and increase in the dollar deposits due to the shift in yuan's outlook, which puts pressure on the yuan and China's monetary policy. Such cuts could slow the process and ease the yuan's depreciation pressure," said Nomura China economist Zhang Zhiwei.
The Chinese currency has suffered a reversal of fortunes this year amid a faster-than-expected weakening of the country's economy, and as the unfolding euro-zone crisis leads to periodic rushes among investors to seek the perceived safety of the U.S. currency.
Selling pressure on the yuan increased after the Chinese economy expanded 7.6% from a year earlier in the second quarter, down from the first quarter's 8.1% growth and the slowest pace since the first quarter of 2009.
The yuan's fading appeal also follows data showing weakening investor confidence in China's economy.
At midday Friday, the dollar was trading at 6.3545 yuan, up from 6.3535 yuan late Thursday.
The Chinese unit has fallen 0.9% against the dollar this year after rising 4.7% against the greenback last year.
China recorded net sales of foreign exchange in July, following net purchases in May and June, pointing to capital outflows amid a worsening outlook for the Chinese economy and reduced prospects for yuan appreciation.
Foreign-exchange deposits by individuals and enterprises in China's banking system rose to $412.4 billion in July from $289.9 billion in January, offering clear evidence that people were cashing fewer in dollars for yuan, according to data from China's central bank.
"I think other banks will follow, and this will reduce the accumulation of U.S. dollars. Still, corporates are the main source of this accumulation, and they'd need to regain confidence in the yuan's outlook to stop doing so—lower rates may only slow the pace of their accumulation," said Dariusz Kowalczyk, a strategist with Credit Agricole ACA.FR -1.89% CIB.
"To the degree this happens, the yuan will benefit in the spot market as depreciation pressure will indeed ease," Mr. Kowalczyk added.
While lowering the onshore foreign-currency deposit rates will certainly help the authorities alleviate the pressure on the yuan to some extent, the move will also commercially benefit Chinese banks stuck with a glut of U.S. dollars, especially after Beijing cut benchmark domestic interest rates both in June and July.
The rapid increase in the dollar supply not only resulted from exporters' growing preference for holding the U.S. currency, but also came after Beijing sharply raised annual long-term foreign debt quotas for a range of foreign banks earlier this year, a move aimed at ushering in more foreign investment.
The oversupply of dollars has sharply pushed down the greenback's borrowing cost in China's domestic interbank market in recent months. The benchmark one-month onshore interbank dollar lending rate declined to 0.35% Friday from 1.30% in late July.
Write to Shen Hong at
hong.shen@dowjones.com and Wynne Wang at
wynne.wang@dowjones.com