The scale of foreign exchange reserves is basically stable

China's foreign exchange reserves always adhere to the concept of diversification and decentralization of investment. Monthly changes in foreign exchange reserves are inevitable, and short-term fluctuations do not represent long-term trends. To observe the scale of China's foreign exchange reserves needs to be considered in a longer period of time. It can be said that basic stability is the main tone of China's foreign exchange reserves in recent years. Next, in the face of many uncertain factors, the trend of basic stability of foreign exchange reserves remains unchanged. The scale of foreign exchange reserves is regarded as the "foundation" of China's foreign exchange, and the fluctuation of this data has been concerned by the society. According to the latest foreign exchange reserve data, at the end of November, the scale of China's foreign exchange reserve was 3095.6 billion US dollars, up 22.9 billion US dollars, or 0.7% over the beginning of the year. Compared with the level at the beginning of this year, it is not difficult to find that the scale of China's foreign exchange reserves has remained basically stable since this year.

China's foreign exchange reserves always adhere to the investment concept of diversification and decentralization, which means that the investment of foreign exchange reserves will not put "eggs in the same basket", but use the relationship between different currencies and different asset classes to control the overall investment risk and ensure the preservation and appreciation of foreign exchange reserves. This also means that foreign exchange reserves are jointly affected by valuation effect, trade situation, cross-border capital flow and other situations, and fluctuations in valuation currency exchange rate, bond yield, trade balance and so on are inevitable. Because of this, monthly changes in foreign exchange reserves are inevitable, and short-term fluctuations do not represent long-term trends. To observe the scale of China's foreign exchange reserves needs to be considered in a longer period of time. Since this year, the scale of China's foreign exchange reserves has basically stabilized at around 3.1 trillion US dollars. In recent years, China's foreign exchange reserves also fluctuated slightly around this level.

For example, at the end of November 2016, the scale of China's foreign exchange reserves was $3051.6 billion; at the end of November 2017, it was $3119.3 billion; at the end of November 2018, it was $3061.7 billion. It can be said that basic stability is the main tone of China's foreign exchange reserves in recent years. Next, in the face of many uncertain factors, the trend of foreign exchange reserve scale is basically stable. First, China's economic fundamentals remain good for a long time, which determines the trend of basic stability of foreign exchange reserves. From the external point of view, the possibility of "peaking and falling back" of world economic growth is increasing, the global sentiment of unilateralism and trade protectionism is intensifying, and there are still many external uncertainties. Influenced by multiple internal and external factors, China's economic growth faces many difficulties, but on the whole, China's economy continues to maintain a stable and steady development trend, with the main indicators operating within a reasonable range, effectively coping with the complex situation of significantly increased international risk challenges. China's economic development has huge resilience, potential and room for manoeuvre, and the long-term trend of economic growth will not change, which will provide strong support for the basic stability of foreign exchange reserves.

The second is the market-oriented level and flexibility of RMB exchange rate, which helps to maintain the basic stability of foreign exchange reserves. After the RMB broke "7" this year, there was no "falling endlessly" situation in the previous market panic. On the contrary, breaking the "7" further breaks the "floating fear" of the RMB exchange rate, opens the floating range of the RMB exchange rate, and makes the exchange rate more flexible. Recently, the exchange rate of RMB once reached above "7". Even when the fluctuation is larger than before, it does not cause market panic. This shows that the adaptability of the market to the two-way floating of RMB is further enhanced, and the market's judgment on the trend of exchange rate is also divided, which helps to avoid the herding effect of the market, helps to maintain the stability of the foreign exchange market, and is more conducive to foreign exchange reserves The scale remained basically stable. The third is that the counter cyclical macro-control policy continues to make efforts, which helps to maintain the basic stability of foreign exchange reserves. With the implementation of a series of counter cyclical macro-control policies, China's trade situation is expected to continue to improve.

The bank's long-term net settlement of foreign exchange on behalf of customers has maintained a surplus for 14 consecutive months, and the long-term RMB has a strong appreciation expectation. In response to market volatility, China has rich experience and sufficient policy tools. For example, during the fluctuation of foreign exchange market this year, China strengthened the guidance of expectation, and firmly grasped the dominant power of market expectation through a series of measures such as strengthening market communication and issuing central bank bills, avoiding further fermentation of panic. In the next stage, these positive factors will continue to play a role in maintaining stable supply and demand in the foreign exchange market, maintaining the basic balance of cross-border capital flows, promoting a more balanced balance of international payments, and maintaining the basic stable trend of foreign exchange reserves.