Q: The State Administration of Foreign Exchange (SAFE) has just released the latest data regarding China’s foreign exchange reserves. Could you explain the causes for the changes in foreign exchange reserves of February 2022? What will be the future trends?

A: By the end of February 2022, China’s foreign exchange reserves stood at US$3.2138 trillion, down by US$7.8 billion, or 0.24%, from the end of January.

In February 2022, cross-border capital flows were in a stable and orderly manner, while supply and demand of China’s foreign exchange market were basically balanced. In the international financial market, influenced by factors like geopolitical situation and the expectations of monetary policies in major countries, the US dollar index rose slightly, and global financial asset prices fell. Denominated in the US dollar, China’s foreign exchange reserves declined this month due to the combined effects of currency translation and asset price changes.

At present, the external situation is complex and severe, as the COVID-19 pandemic is still spreading around the world, and volatility in international financial markets has increased significantly. However, China has coordinated epidemic prevention and control with economic and social development. By prioritizing stability and seeking progress while maintaining stability, China has kept the economy operating within an appropriate range, which is conducive to the overall stability of the foreign exchange reserves.