China's foreign exchange market is generally stable

On April 7, the latest foreign exchange reserve scale data released by the State Administration of Foreign Exchange showed that as of the end of March this year, China ’s foreign exchange reserve scale was US $ 30606 billion, a decrease of US $ 47.3 billion from the beginning of the year, or 1.5%. In March, China's foreign exchange market was generally stable, and the supply and demand of foreign exchange remained basically balanced.

Regarding the reasons for the change in the scale of foreign exchange reserves, Wang Chunying, a spokesperson and chief economist of the State Administration of Foreign Exchange, said that in March, the international financial market fluctuated significantly due to factors such as the accelerated global spread of the new coronary pneumonia epidemic and the sharp drop in international crude oil prices . The US dollar index strengthened, some non-US dollar currencies fell against the US dollar, and asset prices in major countries adjusted sharply. Under the combined effects of exchange rate conversion and changes in asset prices, China's foreign exchange reserves have declined in scale.

The data shows that the international financial market fluctuated sharply in March. In terms of currency, the dollar exchange rate index (DXY) rose from 98.1 at the end of February to 99.0. Among non-dollar currencies, the euro was basically flat, the pound fell 3.1%, and the yen rose 0.3%. In terms of assets, the hedged global bond index, denominated in US dollars, fell 1.6%; the S & P 500 stock index fell 12.5%, the Eurozone Stoxx 50 index fell 16.3%, and the Nikkei 225 index fell 10.5%. The investment scale of many international institutional investors has also been affected to varying degrees. For example, in the first quarter of 2020, the Norwegian government pension investment loss was 117.1 billion kronor (equivalent to 112.6 billion US dollars).

"Affected by the epidemic, domestic export companies are faced with problems such as uncoordinated industrial chain resumption of production and production, which has affected production. In addition, the March epidemic has accelerated overseas and foreign demand has been greatly impacted. Therefore, real trade factors are also expected to form the scale of foreign exchange reserves. "Dragging." Wen Bin, chief researcher of China Minsheng Bank said, but also to see that the large fluctuations in the global financial market have affected many international institutional investors. Although the scale of China's foreign exchange reserves has declined, it has remained stable at Above $ 3 trillion, monthly fluctuations are normal.

Wen Bin believes that the scale of China's foreign exchange reserves will still have a stable foundation in the next stage. On the one hand, the fundamentals of China ’s long-term economic growth have not changed, the domestic epidemic prevention and control situation has continued to improve, counter-cyclical regulatory policies have gradually exerted force, and the economy has been actively improving, which has supported foreign exchange reserves. On the other hand, the hedging characteristics of RMB assets have gradually emerged. Even in the period of large fluctuations in the global financial market, China's financial market has limited fluctuations. Although the RMB has depreciated against the US dollar, it has appreciated against a basket of currencies.

In addition, as the panic in the international financial markets is digested, the US dollar index is expected to fall back, and the price of non-US dollar assets is gradually repaired, which will also help China's foreign exchange reserve valuation increase. Taking all factors into consideration, China's foreign exchange market will remain stable, cross-border capital flows will be basically balanced, and the scale of foreign exchange reserves is expected to remain stable and able to withstand various risks.

Wang Chunying said that due to the impact of the new coronary pneumonia epidemic, geopolitics and other factors, the growth of the world economy and trade will be seriously affected, and the turmoil in the international financial market will increase. As China's overall efforts to promote epidemic prevention and control and economic and social development have achieved positive results, the resumption of production and production of enterprises has accelerated significantly, the domestic real economy is gradually recovering and improving, and the long-term development trend of China's economy will not change, and it will continue to provide foreign exchange reserves The scale is generally stable and provides support.