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 May 2022? What will be the future trends?

A: By the end of May 2022, China’s foreign exchange reserves stood at US$3.1278 trillion, up by US$8.1 billion, or 0.26%, from the end of April.

In May 2022, China’s foreign exchange market was generally stable, and the domestic supply and demand of foreign exchange maintained a basic balance. In the international financial market, influenced by the monetary policies and expectations of major countries, global economic growth prospects, geopolitical situation and other factors, the US dollar index fell slightly, and the financial asset prices of major countries were mixed. Denominated in the US dollar, China’s foreign exchange reserves rose this month due to the combined effects of currency translation and asset price changes.

At present, the external situation is complex and severe, the global economy is facing increasing risks and challenges, and the international financial market is still subject to great uncertainty. However, China has effectively coordinated epidemic prevention and control with economic and social development. China’s long-term economic fundamentals have not changed, which will support the overall stability of the foreign exchange reserves.