What is the interest rate for deposit products?
Can foreign currencies (such as US dollars) still give good interest rates on deposits?
The answer is yes.
Although there is a consensus expectation that US dollar interest rates may fall in the future, towards the end of the year, banks are choosing more and more foreign currency deposits.
Not only that, many banks in the market still have short- and medium-term deposits with interest rates exceeding 5% per annum.
Moreover, combined with the "good start" and "new customer activities", the deposit interest rate of some banks can even rise to 9%.
Of course, whether these products are "suitable" and "reasonable" still needs to be examined by investors themselves.
Short- and medium-term deposit rates up to 5.5%
Recently, Shishido browsed the apps of various banks and found that there are still good interest rates for short- and medium-term US dollar deposits.
Bank of Hangzhou's Baiying Deposit has an annual interest rate of 4.3%-4.7% for a 3-month US dollar deposit, a 6-month US dollar deposit with an annual interest rate of 4.8%-5.4%, and a 13-month US dollar deposit with an annual interest rate of 4.9%-5.5%.
Compared with the middle of this year, the annual interest rate of the bank's products with a term of more than 6 months (inclusive) has even increased by 0.1 to 0.3 percentage points.
Bank of Jiangsu's "Xiangyingbao" foreign currency deposit, if the minimum deposit is US$30,000, the annual interest rate of 1-month fixed interest rate is 5%, and the annual interest rate of 12-month fixed interest rate is 4.8%. For a minimum deposit of $10,000, the interest rate is 4.7% for a 1-month term and 4.5% for a 12-month term.
If the threshold for deposit purchase is too high, the bank also provides a one-month time deposit product with a minimum purchase of US$2,000 and an annual interest rate of 4.5%, of course, with a relatively short lock-up period
Bank of Nanjing's Shanghai, Wuxi and other branches issued the "Xin Hui Tian personal dollar deposit product", with a minimum purchase of 10,000 US dollars, and a one-year interest rate of 5%.
Hengfeng Bank's US dollar deposits, if the minimum purchase threshold of US$10,000 are met, the interest rate is 4.8% per annum for 3-month US dollar deposits, 5% per annum for 6-month US dollar deposits, and 5.1% per annum for 1-year US dollar deposits.
The preferential interest rate of foreign banks can even reach 9%
In addition to Chinese banks, US dollar fixed deposits in some foreign banks have also maintained high yields.
For example, Kasikornbank's USD fixed deposit product for individual customers has a minimum deposit of US$10,000 and a deposit period of 3/6/12 months, with a maximum interest rate of 5.2%, an increase of 0.15 percentage points from the middle of the year.
HSBC's USD fixed deposit has a tenor of 6/12 months and an annualized interest rate of up to 4.5%. However, the minimum purchase threshold for this product is $20,000 and must be new funds.
In addition, the opening of some specific businesses can also allow investors to enjoy unexpected high-interest deposits.
Previously, Standard Chartered Hong Kong had announced that from December 8 this year, applying for and successfully opening a wealth management connect account in the bank, depositing new funds of HK$1 million or equivalent, and successfully opening a southbound wealth management connect account, can enjoy a cash rebate of up to HK$3,000.
What's more, from 8 December 2023 to 29 December 2023, selected WMC Southbound customers can exchange RMB to USD equivalent of HK$100,000 or above and place USD time deposits with designated funds at an interest rate of 9% p.a. for a tenor of 1 month and 6% p.a. for a tenor of 3 months.
However, it should be noted that this business is mainly for Hong Kong, China.
Pictured: Statement of relevant announcements
The yield of US dollar wealth management is considerable
In addition, the yield of US dollar wealth management products distributed by many banks is also very impressive.
For example, Bank of China sells Wealth Management - USD Joy Daily (Advanced Gain) - Banknotes, with a performance comparison benchmark of 2.5%-3% and an annualized rate of return of up to 5.31% in the past 3 months, while Bank of China Wealth Management - USD Joy Daily (Advanced Gain) - Hui, with a performance benchmark of 2.5%-3% and an annualized rate of return of up to 5.3% in the past 3 months.
Both products are low-to-medium risk products, with a minimum purchase of $1 and can be redeemed daily on weekdays.
Pictured: Historical returns of Wealth Management – USD Joy (Advanced Gain) – banknotes
Another example (USD 1-year rollover) Bank of China Wealth Management Global Allocation High Rating - banknote investment period of 364 days, risk level of R1, minimum purchase of $1, performance benchmark of 4.20%, annualized rate of return of 4.56% since its establishment.
Another example is the CMB Wealth Management Wealth Management distributed by China Merchants Bank. The product has a risk rating of R3, with a minimum purchase of $1, redeemable daily, and as of December 20, the annualized return of the product over the past 1 month is 5.02%, and the annualized return over the last 3 months is 4.9%.
Be aware of the risk of exchange rate fluctuations
Although the returns of some US dollar deposit products and US dollar wealth management products are more "fragrant" than those of RMB products in the same period, and can lock in the income for a period of time, it is also necessary to pay attention to the possible impact of exchange rate fluctuations on the yield when temporarily converting foreign currency.
Choice data shows that on September 8, the US dollar once reached 7.35 against the yuan during the year, and since then, as the RMB exchange rate has risen, as of 17:27 on December 20, the US dollar has fallen to 7.1356, a decrease of about 2.9%.
If some investors are just stepping on this "cycle", then the actual rate of return of the product will be greatly discounted.
As for the future exchange rate trend, Yu Lu, a foreign exchange commodity researcher at Industrial Research Company, pointed out that the recent weak market of the US dollar index has been prolonged, and the market risk appetite has continued to remain high, and the RMB exchange rate has interrupted the weak market in the past two weeks to resume the appreciation trend. Yu Lu believes that there is still room for appreciation of the RMB exchange rate before the Spring Festival.
In terms of hedging strategy, Yu Lu said that it is still recommended to lock in the rigid foreign exchange settlement order as soon as possible before the Spring Festival, which can be used to improve the foreign exchange settlement price with option products. It is recommended to stay on the sidelines after the Spring Festival. It is recommended to start the layout for locking in the US dollar foreign exchange purchase exposure within 1 year.
Zhang Jun, chief economist of China Galaxy Securities, and others believe that the downward trend of the US dollar index cannot be achieved overnight, and the RMB exchange rate will enter two-way fluctuations after rapid appreciation: the market is still more aggressive in the timing and magnitude of the Fed's turn, and the stickiness of the economy and the re-relaxation of financial conditions after the epidemic are still not conducive to the Fed cutting interest rates as soon as possible, and the interest rate cut is biased towards the second quarter, with an interest rate cut of at least 100BP, but in the context of the current economic and labor data deterioration is not obvious, the CME reflects the market interest rate cut expectations of about 150BPThe suspicion of "front-running", there is a possibility of phased correction in the future, and the market will still be full of twists and turns during the period, which also means that the dollar index cannot be smoothly downward.
Chief Economist of China Galaxy Securities: Zhang Jun S0130523070003
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