US Dollar Deposit Rates Rise in China, Yields Top 3% as Yuan Gains Erode Returns

Since July 2026, the onshore US dollar time deposit market has seen a round of rate increases, with multiple Chinese banks and foreign banks operating in China raising US dollar deposit rates. Annualized yields on several products have exceeded 3%, and some short-term products have climbed to 4%. By contrast, one-year yuan time deposit rates currently stand at around 1%, making US dollar deposit rates significantly higher than yuan deposit rates.

Hang Seng Bank launched a promotional US dollar time deposit for new funds from July 1 to July 31, with a minimum deposit of US$20,000 and a one-month annualized rate of 4%. Bank of East Asia offered a promotion for new individual customers, with deposit amounts from US$10,000 to US$50,000. Its one-month rate was 3.30%, three-month 3.40%, six-month 3.35%, and twelve-month 3.20%. The offer runs until August 31.

Among Chinese banks, China Minsheng Bank set tiered rates: deposits below US$100 earn 0.35% annually, while amounts above US$100 earn 3.1%. China CITIC Bank offers 2.8% for deposits from US$50 and 3% for US$100 and above. Shengjing Bank, with a US$50 minimum, offers 3.1% for both one-year and two-year terms. Bank of Beijing requires US$5,000 for a one-year rate of 3%. Industrial and Commercial Bank of China and Bank of China both offer 2.8% for one-year deposits with a US$5,000 minimum.

Since the start of 2026, the yuan has appreciated more than 3% against the US dollar. In July, the yuan's appreciation widened to 0.3% from 0.1% the previous month, marking a tenth consecutive monthly gain. Late in the month, both offshore and onshore spot rates strengthened past 6.75, reaching their highest levels since early February 2023, with monthly gains of 0.6% each.

This round of US dollar deposit rate increases has produced an inverted yield curve, with short-term rates exceeding longer-term rates. Minsheng Bank offers 3.1% for one-year US dollar deposits and 2.8% for two-year. Market cases show that a depositor who converted funds at an exchange rate of 7.3 in February 2025 and deposited US$50,000 at 4.5% suffered a principal loss of about RMB 15,000 when the yuan strengthened to around 6.9 by maturity, due to the exchange-rate difference.