As shown in the statistics of the State Administration of Foreign Exchange (SAFE), in October 2020, the amount of foreign exchange settlement and sales by banks was RMB 1027.9 billion and RMB 940.8 billion, respectively, with a surplus of RMB 87.1 billion. In the US dollar terms, the amount of foreign exchange settlement and sales by banks was USD 153.2 billion and USD 140.2 billion, respectively, with a surplus of USD 13.0 billion.
During January to October 2020, the accumulative amount of foreign exchange settlement and sales by banks was RMB 11277.5 billion and RMB 10654.7 billion, respectively, with an accumulative surplus of RMB 622.8 billion. In the US dollar terms, the accumulative amount of foreign exchange settlement and sales by banks was USD 1619.4 billion and USD 1530.3 billion, respectively, with an accumulative surplus of USD 89.1 billion.
In October 2020, the amount of cross-border receipts and payments by non-banking sectors was RMB 2402.3 billion and RMB 2233.6 billion, respectively, with a surplus of RMB 168.8 billion. During January to October 2020, the accumulative amount of cross-border receipts and payments by non-banking sectors was RMB 24103.4 billion and RMB 23674.6 billion, respectively, with an accumulative surplus of RMB 428.7 billion.
In the US dollar terms, in October 2020, the amount of cross-border receipts and payments by non-banking sectors was USD 358.0 billion and USD 332.8 billion, respectively, with a surplus of USD 25.1 billion. During January to October 2020, the accumulative amount of cross-border receipts and payments by non-banking sectors was USD 3463.4 billion and USD 3400.9 billion, respectively, with an accumulative surplus of USD 62.5 billion.
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Addendum: Glossary and relevant definitions
Balance of payments (BOP) refers to all economic transactions between residents and non-residents.
Foreign exchange settlement and sales by banks refers to settlement and sale transaction that bank executes for customers and for the banks themselves, including statistic data on settlements of forward contracts for foreign exchange settlement and sales and the exercises of option, and excluding the transactions in the interbank foreign exchange market. The statistic reporting date of Foreign exchange settlement and sales by banks should be the trade day of the Foreign exchange settlement and sales transaction. By definition, foreign exchange settlement means foreign exchange holders sell foreign exchange to designated foreign exchange bank, and foreign exchange sales means designated bank sells foreign exchange to foreign exchange buyers. The net position of foreign exchange settlement and foreign exchange sales could be position squared through transactions on the inter-bank foreign exchange market, and it is one of the major contributors to the country’s foreign exchange reserve fluctuation, though it is not equal to net change in foreign exchange reserves during the same period
Unlike the principle of balance-of-payments statistics, which cover the transactions between residents and non-residents, foreign exchange settlement and sales by banks only cover transactions of RMB and foreign currencies between banks and customers or on banks for themselves.
The newly signed contract amount of forward foreign exchange settlement and sales refers to the binding forward contract between designated foreign exchange bank and client that predetermines foreign exchange currency, amount, exchange rate and tenor which to be executed upon maturity. The newly signed forward contract enables corporate to lock in advance the exchange rate for the purchase or sale of a currency on a future date to manage relevant foreign exchange risk arising from RMB volatility. In general, bank will hedge its foreign exchange risk exposures arise from the newly signed forward contract in the Interbank foreign exchange market. For example, when bank has net foreign exchange long position, bank will short the equivalent amount of foreign exchange in the Interbank foreign exchange market in advance, or vice versa. Therefore, the newly signed contract amount of forward foreign exchange settlement and sales is also one of contributors to China’s foreign exchange reserve fluctuation.
The unwind amount of forward foreign exchange settlement and sales refers to, where client is unable to perform the original forward contract due to change in its real demand, client to fully or partially close its forward position by executing another deal with opposite direction to the original contract.
The rolling amount of forward foreign exchange settlement and sales refers to client to adjust the settlement date of original contract due to change in its real demand.
The outstanding amount of forward foreign exchange settlement and sales by the end of the current period refers to the total amount of forward contracts accumulated from all non-matured forward contracts with client. The newly signed contract amount and the outstanding amount should satisfy the equation that: the outstanding amount of forward foreign exchange settlement and sales by the end of the current period = the outstanding amount of forward foreign exchange settlement and sales at the end of the previous period + the newly signed contract amount of forward foreign exchange settlement and sales for the period - settlements of forward contracts for foreign exchange settlement and sales for the period - the unwind amount of forward foreign exchange settlement and sales for the period.
The net Delta exposure of outstanding options refers to the implied foreign exchange spot risk exposure from outstanding option contracts that bank executed with client. Bank shall hedge such risk in the foreign exchange market for risk management during deal life cycle.
The cross-border receipts and payments by non-banking sectors refers to the receipts and payments between domestic non-banking sectors (including institutional and individual residents) and non-residents through domestic banks, excluding receipts and payments in cash. In particular, the statistics includes cross-border receipts and payments between non-banking sectors and non-residents through domestic banks (including RMB and foreign currency), and domestic receipts and payments between non-banking sectors and non-residents through domestic banks (temporarily excluding domestic receipts and payments in RMB between individual residents and non-resident individuals). Data are collected when customers conduct receipts and payments with non-resident counterparties at domestic banks. Specifically, the receipts refer to the capital of non-banking sectors received from non-residents via domestic banks; the payments refer to the capital of non-banking sectors paid to non-residents via domestic banks.
The cross-border receipts and payments by non-banking sectors is based on cash basis, different from the accrual basis required by the Balance of Payments Statistics. The statistics merely reflects the cash flows between non-banking sectors and non-residents and does not include barter transactions or transactions with non-residents conducted by the banks themselves. Therefore, the scope of the statistics is narrower than that of the Balance of Payments Statistics.