Q: The State Administration of Foreign Exchange (SAFE) has just released the latest data on China's foreign exchange reserves. Could you explain why China's foreign exchange reserves changed in November 2020? What would you say about the future trends?
A: By the end of November 2020, China's foreign exchange reserves amounted to US$3.1785 trillion, up by US$50.5 billion or 1.61% month on month.
In November, China’s foreign exchange market remained robust, market expectations stayed stable and cross-border capital flows maintained a general equilibrium. On global financial markets, due to the COVID-19 pandemic, developments of vaccines and monetary and fiscal policy expectations in the major countries, the US Dollar Index tumbled, the non-dollar currencies took an upswing and asset prices of major countries, like share and bond prices, climbed. Under the combined impact of exchange rate conversion and asset price changes, China's foreign exchange reserves increased in November.
Currently, with the COVID-19 pandemic still wreaking havoc across the world and increasing destabilizing and uncertain factors facing the world economy, global financial markets are faced with much more risks and challenges. Going forward, it is expected that China’s foreign exchange market will remain stable while continuing two-way fluctuations.