Central Bank Cuts Interest Rates for Major Overseas Currencies

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Last updated at: (Beijing Time) Wednesday, November 20, 2002

Central Bank Cuts Interest Rates for Major Overseas Currencies

The People's Bank of China (PBOC), the nation's central bank, has decided to lower the petty forex deposit interest rate in commercial banks within the country starting from November 19, 2002.

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The People's Bank of China (PBOC), the nation's central bank, has decided to lower the petty forex deposit interest rate in commercial banks within the country starting from November 19, 2002.

Rates for one-year domestic US dollar, British pound, Euro, Hong Kong dollar, Canadian dollar and Swiss Franc are lowered from the present 0.4375, 0.25, 0.1875, 0.3125, 0.0625, 0.5 percent down to 0.8125, 2.5625, 1.875, 1.125,1.5625,0.4375 percent respectively.

Zhang Liqun, a senior researcher with the Development Research Centre under the State Council, said the move was a normal response to international markets.

Earlier this month, the US Federal Reserve announced it was cutting the dollar interest rate by an aggressive half percentage point, taking it to a four-decade low.

China's strong economic performance and large foreign currency reserves also required the nation to cut interest rates to increase the fluidity of foreign currencies, said Ding Maozhan, director of the Research Department of Beijing's Chongwen District Government.

The national economy grew a year-on-year 7.9 per cent in the first nine months of this year and is expected to grow 8 per cent for the whole year.

Some other economists believe China's economy will grow at an annual rate of 7 per cent in the coming two decades.

"There is really no need to keep such a large amount of foreign exchange reserves, as this will increase the country's financial burden," Ding said.

By PD Onlien Staff Member Li Heng

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