In 2019, the scale of foreign exchange reserve is stable and rising

According to the data released by the State Administration of foreign exchange on January 7, as of the end of December 2019, the scale of China's foreign exchange reserves was 3107.9 billion US dollars, up 12.3 billion US dollars, or 0.4% compared with last November, and up 35.2 billion US dollars, or 1.1% compared with the beginning of last year. From the year-on-year point of view, there were 8 months of recovery and 4 months of decline, showing a steady upward trend as a whole. Wang Chunying, spokesman and chief economist of the State Administration of foreign exchange, explained the reason for the rise of the scale of foreign exchange reserves in December 2019: "in December last year, the supply and demand of China's foreign exchange market continued to maintain a basic balance. 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. There is also a combination of factors such as exchange rate translation and asset price changes, and the scale of foreign exchange reserves has increased slightly. "

Wen bin, chief researcher of Minsheng Bank, believes that the change in valuation played a role in the return of foreign exchange reserves in December last year. In terms of major exchange rate movements, the depreciation of the US dollar index, from 98.3 at the end of November last year to 96.4 at the end of December last year, reached 1.9%. 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 U.S. 10-year Treasury bonds rose to 1.92% from 1.78% at the end of November last year, and the hedged Global Bond Index denominated in U.S. 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 part of the increase in valuation, it is expected that the overall valuation factors will affect the scale of foreign exchange reserves in December 2019 Positive impact. Wen bin believes that trade contributed to the recovery of foreign exchange reserves in December last year. In December, China's leading indicators, new export order PMI and import PMI, rose from 48.8% to 50.3% month on month, and returned to the boom and bust line after 18 months; import PMI rose 0.1 percentage point to 49.9%, reaching the highest level in 2019, which is close to the boom and bust line, indicating that trade has improved. Wang Chunying said that in the whole year of 2019, in the face of the complex situation of significantly rising risk challenges, China's main macroeconomic indicators remained within a reasonable range, economic growth remained resilient, and the growth momentum continued 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 been rising steadily. Zhao Qingming, chief economist of China Financial Futures Exchange Research Institute, believes that the scale of foreign reserves will still increase in 2020, which may be mainly due to exchange rate conversion. "It is expected that monetary easing in Europe and the United States will come to an end. If this year's economic growth is better than last year's, the possibility of the Fed's interest rate cut will be greatly reduced, and bond prices are expected to remain stable. This year, the US dollar exchange rate is likely to fall, and non US currencies such as the euro and yen are expected to rise to some extent. " Wang Chunying stressed that there are still many uncertainties in global politics and economy, and the volatility of international financial market may increase. However, the basic trend of China's economic stability towards good and long-term good has not changed. We will adhere to supply side structural reform as the main line, reform and opening up as the driving force, promote high-quality development, and maintain the economic operation in a reasonable range, which will provide support for the overall stability of foreign exchange reserves.