CHINESE savers, eager to convert their yuan before the currency keeps depreciating, are snapping up U.S. dollar investment products that offer options for keeping money at home instead of sending it overseas.

    The latest wealth management products from China Merchants Bank Co. in Shanghai last week, paying 2.37 percent annual interest on U.S. dollars, sold out in 60 seconds flat.

    “You won’t be able to get it online because it’s gone in less than a minute,” said a branch manager, who would only give the surname Xu, and encourages customers to book a day in advance next time.

    A growing number of offerings of such U.S. dollar funds and how quickly they’re being purchased show the surging demand for foreign currency amid outflows that are estimated to have totaled more than US$1.5 trillion since the beginning of 2015. By shifting into dollars, deposit holders are shielded from the yuan’s losses without having to take their money out of the country to seek returns.

    “It seems an attractive choice to convert the yuan into the dollar sooner rather than later,” Harrison Hu, Singapore-based chief greater China economist at NatWest Markets, a unit of Royal Bank of Scotland Group, wrote in a note. He estimates that household purchases of foreign exchange could double to US$15 billion a month in the coming quarter, absent new controls.

    A more hawkish than expected outlook from the U.S. Federal Reserve after it lifted interest rates last week has helped accelerate a dollar rally, with analysts predicting further gains.

    As the yuan has declined, China’s authorities have tried to vigorously enforce strict rules on moving cash over the border, where it is often invested in purchases such as real estate. Chinese citizens are limited to exchanging the equivalent of US$50,000 a year into foreign currency.

    The State Administration of Foreign Exchange on Friday said that although November’s outflows were bigger than the previous month, they remain in a stable range.

    In recent weeks, policymakers in Beijing have put the brakes on everything from companies buying assets overseas to offshore purchases of life insurance to stem the tide of cash outflows. The fresh measures include checks by the currency regulator on any capital account transactions involving foreign exchange of US$5 million or more. That followed steps earlier this year to ban the sharing of foreign-exchange quotas.

    In November, banks sold 49 percent more foreign currency denominated wealth management products, most of them in U.S. dollars, than in October, according to PY Standard, a Chengdu-based wealth management research and ratings firm that tracks the data. November’s foreign currency deposits increased 11.4 percent from a year earlier, more than double the 4.8 percent rise in October, according to the People’s Bank of China.

    Banks often use proceeds from wealth management products to buy dollar-denominated bonds sold by Chinese companies offshore, according to Liu Dongliang, a senior fixed income analyst at China Merchants Bank. It’s easier for Chinese companies to get cheaper funding offshore, and they then can bring the money back onshore to be converted into yuan — an activity encouraged by the government, Liu added.

    To avail of China Merchants Bank’s 2.37 percent dollar wealth management product, customers need to put in a minimum of US$18,000, and the amount can redeemed at any time. The return on a similar product last year was only about 1.8 percent, according to the manager. China Merchants Bank pays only 0.7 percent on one-year dollar time deposits. (SD-Agencies)