(Yicai) Feb. 11 -- Many Chinese commercial banks have sharply trimmed their interest rates on US dollar deposits, with some even suspending the sale of such products to avoid interest rate risks due to lenders expecting the US Federal Reserve to continue cutting rates.

"Bank of Hangzhou has suspended the sale of US dollar deposit products since Feb. 9 and a new US dollar deposit rate will likely be introduced soon," a wealth manager at the lender told Yicai. The interest rate cut is expected to be big, with that for products with different maturities to be trimmed to around 3 percent, the person added.

The Beijing branch of the Bank of Nanjing just cut the US dollar deposit interest rate last week, a customer manager said to Yicai. The splashes include the interest rate of three-month products dropping to 2.1 percent from 4.3 percent and that of one-year products to 2.5 percent from 4.1 percent, the person noted.

The Fed's benchmark interest rate is one of the key considerations for Chinese banks when determining their rate on US dollar deposits, Yang Haiping, a distinguished research fellow at the Beijing Wealth Management Industry Association, told Yicai. 

As the Fed has been in a cycle of interest rate cuts, commercial lenders have properly lowered their rates on US dollar deposits after comprehensively assessing the actual demand for the greenback to effectively reduce relevant interest payment costs, Yang added.

After the latest round of interest rate cuts, the interest rate gap between US dollar and Chinese yuan deposits is expected to continue to narrow.

Yicai learned that just a few banks are still offering higher US dollar deposit interest rates, with most being foreign or regional city commercial lenders, and only depositors who meet certain conditions can enjoy higher rates.

For example, UK lender Standard Chartered still offers a three-month US dollar deposit product with an interest rate of 4.40 percent, but requires a minimum deposit of USD40,000 and is only available to new customers.

Editors: Tang Shihua, Martin Kadiev