Hong Kong lenders engage in a price war as they fight for renminbi deposits amid tightened restrictions on cross-border finance and mounting demand for funds that sent the offshore interbank offered rate to more than 9 percent overnight.
Analysts expect the interbank rate to continue to rise in the short term, potentially jacking up the three-month time deposit rate to exceed 4 percent, the Hong Kong Economic Journal reported on Thursday.
China Construction Bank (Asia) Corp. Ltd. has set the three-month time deposit rate at a maximum of 4 percent, while OCBC Wing Hang Bank Ltd. is offering 3.9 percent for one-month deposits.
DBS Bank (Hong Kong) Ltd. also raised its three-month time deposit rate for renminbi to 3.55 percent, with other banks are increasing their one to six-month rates by 20 to 70 basis points to 3.5 percent.
Wing Lung Bank Ltd.’s head of deposits Kung Chi-ming said the three-month rate may surpass further 4 percent by year-end, given the sustained shrinking of the renminbi pool.
Renminbi savings and certificates of deposit in the city has plunged for three consecutive months since the unexpected devaluation of the currency on Aug. 11 to below 1 trillion yuan (US$156.2 billion) in October, the report said.
– Contact us at [email protected]