In July, the scale of foreign reserves reached a new high since 2016

According to the latest data on the scale of foreign exchange reserves recently released by the State Administration of foreign exchange, as of the end of July, the scale of China's foreign exchange reserves was US $3235.9 billion, an increase of US $21.9 billion or 0.68% over the end of June. In July, the supply and demand of China's foreign exchange market was basically balanced, and the market expectation remained stable.

"Novel coronavirus pneumonia is repeated in the international financial market, the main national monetary policy expectations and macroeconomic data and other factors, non dollar currencies have been slightly stronger, and global financial asset prices have risen overall. Foreign exchange reserves are denominated in US dollars. The amount of non US dollar currencies increases after they are converted into US dollars. Combined with factors such as changes in asset prices, the scale of foreign exchange reserves increases in the current month. " Wang Chunying, deputy director of the State Administration of foreign exchange and spokesman, introduced.

In July, the scale of foreign exchange reserves reached a new high since 2016. Wen bin, chief researcher of China Minsheng Bank, said that previously, the scale of foreign exchange reserves decreased by US $7.8 billion month on month in June. The scale of foreign exchange reserves rebounded in July, mainly due to the slight depreciation of the US dollar, the overall appreciation of non US dollar currencies and the increase in the valuation of foreign exchange reserves due to exchange rate conversion.

Meanwhile, real trade and cross-border capital flows are expected to contribute to the growth of foreign exchange reserves. Wen Bin said that since this year, the overall recovery of the global economy and the improvement of foreign demand have driven China's exports to maintain rapid growth. In July, the manufacturing PMI index of major economic systems such as the United States, Japan and the euro zone maintained a high boom, indicating a sustained economic recovery, supporting China's exports, and foreign trade is expected to continue its growth trend. RMB assets are quite attractive, and securities investment shows a net inflow trend. In July, the cumulative net inflow of northward funds was 10.8 billion yuan, which contributed to the growth of China's foreign exchange reserves.

What is the trend of foreign exchange reserve scale in the future? Wen bin believes that the scale of China's foreign exchange reserves still has a stable foundation in the next stage. On the one hand, China's economic operation has been strengthened and improved steadily, domestic demand has continued to recover, the main economic indicators are in a reasonable range, and new achievements have been made in high-quality development, which supports the stability of the scale of foreign exchange reserves. On the other hand, foreign demand is expected to remain relatively strong, China's foreign trade will continue to grow, RMB assets still have allocation potential, supply and demand in the foreign exchange market is expected to maintain a basic balance, and the RMB exchange rate elasticity is gradually enhanced, which will help to maintain the stability of the scale of foreign exchange reserves.

"It should also be noted that the global economic situation is still complex and changeable. The continuous evolution of the epidemic has brought more unstable and uncertain factors to the economic recovery. Global inflation expectations are rising and the recovery of major economies is accelerating, but the U.S. employment data fluctuates again. At the same time, some Fed officials made hawkish remarks, indicating that their monetary policy may shift in advance, and the market expectations are quite different. In the next stage, we should adhere to the general tone of seeking progress while maintaining stability, do a good job in cross cyclical adjustment of macro policies, strengthen efforts to promote the recovery of domestic demand, pay close attention to the risk of early shift of monetary policy of the Federal Reserve, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. " Wen Bin said.

Wang Chunying said that the novel coronavirus pneumonia epidemic is continuing to evolve, and the international economic and financial situation is uncertain and unstable. However, our economy has been stable, stable and well established, and new achievements have been made in the development of high quality, which will provide support for the overall stability of foreign exchange reserves.

Source: China Trade News