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 July 2022? What will be the future trends?

A: By the end of July 2022, China’s foreign exchange reserves stood at USD 3.1041 trillion, up by USD 32.8 billion, or 1.07%, from the end of June.

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

At present, the global economic situation is full of challenges. Instability and uncertainties have increased significantly and the international financial market is highly volatile. However, China responded to efficiently coordinate epidemic prevention and control as well as economic and social development, and sustained its strong resilience, great potential and full of vitality in economy with its fundamentals of sound long-term growth unchanged, which will support the overall stability of the foreign exchange reserves.