China will lift the upper limits of the deposit rates for US and Hong Kong dollars in commercial banks within the Chinese territory.

The People's Bank of China (PBC), the country's central bank, announced on Monday that the upper limits for one-year deposits of US and Hong Kong dollars will increase 0.375 percentage points to 2.000 percent and 1.875 percent respectively as at August 23.

Tian Yaling, an expert on foreign exchange, said the PBC's decision is related to interest rate hikes imposed by the United States Federal Reserve.

"The change reflects China's efforts to act in line with the international community," Tian said, noting that the decision might stoke the anticipation of a renminbi appreciation.

This is the third time this year that the central bank has increased deposit rates for the two currencies. The first was on July 22 when China initiated renminbi exchange rate reform.

PBC statistics show that deposits of foreign currencies decreased by US$4.8 billion in July.

(Xinhua News Agency August 23, 2005)