Fed Cuts Interest Rates: Is It Still a Good Time to Invest in USD Wealth Management Products?

On September 19, a reporter from the International Finance News visited multiple bank branches in Shanghai and learned that the current annualized yield of USD wealth management products mostly remains around 3.6%, with expectations of further declines. Multiple relationship managers reminded investors to pay attention to exchange rate risks in their investments.

Experts interviewed pointed out that exchange rate risk, declining interest rate risk, and liquidity risk are key issues investors need to consider. In the long run, building a resilient multi-dimensional asset portfolio is essential to navigate steadily through the new normal of declining interest rate trends.

“I deposited USD for a one-year fixed term. Should I renew the fixed deposit or invest in USD wealth management products upon maturity?” a netizen raised this question on social media. Another netizen shared that they previously invested in a daily-open USD wealth management product, which resulted in exchange rate losses and minimal returns.

On September 19, the International Finance News reporter visited multiple bank branches in Shanghai as an investor to seek advice on USD wealth management. A relationship manager at a joint-stock bank advised investors to take a rational approach to USD wealth management products, mentioning that some short-term products are currently available with an annualized yield of around 3.6%, but future yields are expected to gradually decline.

According to data from PuYi Standards, as of September 14, the average one-month annualized yield of existing closed-end fixed-income wealth management products and open-end fixed-income wealth management products (excluding cash management products) in the market was 1.66% and 2.20%, respectively.

“The decline in USD wealth management yields is not the main issue; the biggest problem is the exchange rate risk. If the cost of buying and settling foreign exchange results in losses, and the wealth management returns cannot compensate for it, and there is no immediate use for the USD, it is advisable to cautiously avoid settling the exchange,” suggested the relationship manager at a state-owned bank.