Since July, a number of banks have raised interest rates on US dollar time deposits and stepped up their marketing efforts. The current round of interest rate increases was initiated by Chinese banks, and foreign banks followed suit. Currently, the annualized interest rate for US dollar time deposits in some banks has reached 4%. Interviewed experts said that investors should not blindly exchange foreign exchange arbitrage due to higher interest levels. Exchange losses due to RMB appreciation may offset interest income or even loss of principal, and that allocating US dollar deposits should be based on actual foreign exchange requirements.

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