Q: The State Administration of Foreign Exchange (SAFE) has just released the latest data on China's foreign exchange reserves. Could you explain the causes of changes in foreign exchange reserves for February 2021? What will be the future trends?

A: By the end of February 2021, China's foreign exchange reserves recorded US$3.205 trillion, down by US$5.7 billion which was 0.18% month on month.

China’s foreign exchange market remained stable and market expectations became more rational in February 2021. In global financial markets, the US Dollar Index picked up and the prices of bond assets of the major countries fell, due to the development in COVID-19 vaccine, fiscal policies of the major countries and inflation expectations. Under the combined effect of foreign exchange rate conversion and asset price changes, China’s foreign exchange reserves dropped slightly .

Going forward, as pandemic response and economic recovery will continue to face rising uncertainties, global financial market volatility will remain intensified. But China will better coordinate pandemic response and economic and social development, and maintain a basic equilibrium in the balance of payments, which will be favorable for a general stable foreign exchange reserve level.