$35.2 billion increase in external reserves in 2019

On January 7, data released on the official website of the central bank showed that by the end of December 2019, the scale of China's foreign exchange reserves had reached US $3107.9 billion, up by US $12.3 billion or 0.4% compared with November 2019, and up by US $35.2 billion or 1.1% compared with the beginning of 2019, a new high in nearly half a year. "In the whole year of 2019, in the face of the complex situation of significantly rising risk challenges, China's main macroeconomic indicators remain within a reasonable range, economic growth remains resilient, and the growth momentum continues to change. On this basis, the operation of China's foreign exchange market has remained generally stable, the balance of payments has been basically balanced, and the scale of foreign exchange reserves has increased steadily. " Wang Chunying, a spokesman for the State Administration of foreign exchange and chief economist, said. In the interpretation of the changes in the scale of foreign exchange reserves in December 2019, Wang Chunying pointed out that in December 2019, the supply and demand of China's foreign exchange market continued to maintain a basic balance pattern.

Influenced by the global trade situation, the monetary policy position of the major central banks, the British election and other factors, the price of the US dollar index and the bonds of major countries in the international financial market fell. The scale of foreign exchange reserves increased slightly due to the combined effect of exchange rate translation and asset price changes. The change of valuation will play a role in the scale of foreign exchange reserve in December 2019. Wen bin, chief researcher of China Minsheng Bank, pointed out that in terms of major exchange rate changes, the depreciation of the US dollar index reached 1.9%; the appreciation of the euro against the US dollar reached 1.8%; and the appreciation of the yen against the US dollar reached 0.8%. The valuation of China's foreign exchange reserves increased after the non US dollar denominated portion was converted into US dollars. In terms of bond yield and price, the yield of us 10-year Treasury bonds rose to 1.92% from 1.78% at the end of November 2019, and the hedged Global Bond Index denominated in US dollars fell slightly by 0.2%, which led to the decrease in the price of major bonds held by China and the decrease in the book value of foreign exchange reserves. After offsetting some of the increase in valuation, it is expected that valuation factors will be positive to the scale of foreign exchange reserves in the current month as a whole Influence.

Wang Hongying, President of China (Hong Kong) Financial Derivatives Investment Research Institute, further said that the current China US trade consultation has reached the first stage agreement, China's exports to the United States and other countries have been further restored, and the increase in trade surplus is also an important reason. However, the increase is not large because at present, China is facing the seasonal adjustment stage of the Spring Festival, and there are also seasonal reasons for the balance of foreign exchange. It is worth noting that China's gold reserves will remain unchanged in December 2019. According to the data, by the end of December 2019, China's gold reserves were 62.64 million ounces in ounces, the same as that in November. Wang Hongying pointed out that in the long run, under the background of low or even negative global interest rates, the central bank's long-term strategy of increasing holdings will not change. In the short term, because of the geopolitical conflict in the Middle East, the price of gold will soar in the short term.

If the central bank buys gold on a large scale, it will lead to high cost of holding and even some losses. Therefore, in the context of the current short-term gold price bubble, the central bank is not a common strategy. It is not even excluded that the central bank will make some technical reduction in the background of further gold rush, and then increase the gold price when the gold price returns to a relatively low level, so as to further hedge the trend of global low interest rate or even negative interest rate monetary policy leading to the decline of cash value. In Wen Bin's view, in 2020, China will continue to improve the "macro Prudential + micro Prudential" two in one management framework of foreign exchange market to ensure the basic balance of international payments; the policy toolbox in trade and investment, balance of payments structure, cross-border capital flow and other aspects will gradually be rich, fully capable of resisting various risks, and effectively ensuring the safety of China's foreign exchange reserve assets All, good liquidity and value preservation and appreciation.