Q: The State Administration of Foreign Exchange (SAFE) has just released the latest data regarding China’s foreign exchange reserves. Can you explain the causes for the changes in foreign exchange reserves of September 2021? Also, what will be the future trends?
A: By the end of September 2021, China’s foreign exchange reserves stood at US$3.2006 trillion, an amount down by US$31.5 billion, or 0.97%, from the end of August.

In September 2021, China’s foreign exchange market operated smoothly, and foreign exchange transactions were rational and orderly. Influenced by factors like the progress of COVID-19 and the monetary policy expectations of major countries, the US dollar index increased, whereas the financial asset prices of major countries declined. China’s foreign exchange reserves, priced by the US dollar, fell this month due to the combined impacts of currency conversion and changes in asset prices.

Due to the constant evolution of the COVID-19 pandemic, the global economic recovery is facing challenges and uncertainties in international financial markets are increasing. However, the fundamentals of China’s long-term sound economic growth have remained unchanged and development resilience is increasingly conspicuous, which is conducive to maintaining the overall stability of foreign exchange reserves.