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 October 2021? What will be the future trends?

A: By the end of October 2021, China’s foreign exchange reserves stood at US$3.2176 trillion, up by US$17 billion, or 0.53%, from the end of September.

In October 2021, the supply and demand in China’s foreign exchange market remained stable, and the cross-border receipts and payments were rational and orderly. In the international financial market, influenced by factors like the progress of COVID-19 pandemic and the expectations of fiscal and monetary policies of major countries, the US dollar index fell slightly, whereas the financial asset prices of major countries were mixed. China’s foreign exchange reserves, denominated in the US dollar, rose this month due to the combined impacts of currency translation and changes in asset prices.

As the COVID-19 pandemic is uninterrupted, the global economic recovery is facing many destabilizing factors, and the international financial market sees high volatility. However, China’s economy continues to recover, with strong resilience and huge potential, which will support the overall stability of China’s foreign exchange reserves.