Several rounds of deposit rate cuts by Chinese banks due to a weak economy have made higher yielding foreign currencies more attractive for investors. Chinese citizens may also kick off foreign-currency conversion in 2025 as they have a quota of $50,000 that resets at the beginning of each year.
There tends to be a seasonal rise in foreign-currency deposits at the start of a year and “the fear of yuan depreciation picked up significantly after Donald Trump’s US election victory, so an uptick of FX deposits starting in December reflected this sort of trend,” said Lynn Song, chief Greater China economist at ING Bank NV.
“It will be interesting to see if this number keeps rising in February’s data” now amid optimism over Chinese tech, general dollar softening and US-Russia talks on Ukraine, he said.
Foreign-currency deposits in China rose to $892.4 billion in January from $852.9 billion in the previous month.
