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 July 2021? What will be the future trends?
A: By the end of July 2021, China’s foreign exchange reserves recorded US$3.2359 trillion, up by US$21.9 billion or 0.68% month on month.
In July, China maintained basic balance in the supply and demand in the foreign exchange market, with stable market expectations. Mainly driven by the COVID-19 resurgence, the monetary policy expectations and macroeconomic data of major economies, non-US dollar currencies strengthened slightly in the international financial market, and the prices of global financial assets went up. China’s foreign exchange reserves, priced by the US dollar, increased this month due to the combined impact of currency conversion and changes in asset prices.
Amid the ongoing uncertainty around the COVID-19 pandemic that leads to the evolving global economic and financial landscape filled with instability, the Chinese economy steadily recovers with good momentum for growth and high-quality development remains firmly in place, which will provide support for the overall stability of foreign exchange reserves.