China has allowed some banks, including state-backed lenders, to offer interest rates on corporate US dollar deposits above the US Secured Overnight Financing Rate (SOFR) of about 3.61% as of early June 2026 [1, 2]. This policy change relaxes a ceiling imposed in 2023 that had limited US dollar deposit rates amid concerns over renminbi weakness [2].
Authorities have informed at least three banks in recent days that they can provide higher interest rates on US dollar deposits, although these banks have not yet acted on the permission [2]. The move aims to encourage companies to hold more US dollar deposits within China and slow the pace of currency conversion from dollars to renminbi, which could reduce upward pressure on the renminbi exchange rate [1, 2].
The onshore renminbi has appreciated by more than 3% against the US dollar this year, reaching 6.77 yuan per US dollar as of June 5, 2026 [2]. The 2023 restriction on US dollar deposit rates helped limit capital outflows when the renminbi was under pressure at that time [2]. Allowing higher rates now may reflect authorities’ confidence in the currency or an intent to balance currency flows.
The relaxation applies specifically to corporate US dollar deposits and affects a select group of banks. While banks have been told they can raise rates, any increase and its scale remain to be seen [2]. The policy could influence money managers’ and companies’ decisions on holding foreign currency deposits versus converting to renminbi.
Chinese regulators will likely monitor the impact of the rate change on capital movements and the exchange rate closely. The next step will be to see if banks begin offering higher US dollar deposit rates and how market participants respond to the new rate freedoms.
