Major state-owned banks in China have lowered their dollar deposit rates for the second time in a month as policymakers aim to prevent a prolonged slide in the yuan.
Interest rates on most dollar deposits offered by the "Big Five" state banks are now capped at 2.8%, down from 4.3% previously. The move is likely intended to bring down dollar deposit rates towards domestic rates to aid the struggling economy and prevent stockpiling of dollars.
The yuan has performed poorly against the dollar this year due to economic slowdown and widening yield differentials with the US. The lower rates could discourage households from putting savings into higher-yielding dollar deposits and nudge Chinese firms, particularly exporters, to settle foreign exchange receipts in yuan.
