The scale of foreign reserves exceeded US $3.2 trillion for three consecutive months



Beijing business daily (reporter Yue Pinyu, intern reporter Liao Meng) on March 7, the official website of the central bank disclosed that by the end of February 2021, the scale of China’s foreign exchange reserves was 3205 billion US dollars, down 5.7 billion US dollars, or 0.18% from the end of January. In terms of gold reserves, gold reserves were at 62.64 million ounces at the end of February, 18 months in a row.

The Beijing Business Daily reporter found that although the scale of China’s foreign exchange reserves decreased slightly in January and February at the beginning of 2021, with a month on month decrease of US $5.9 billion in January, a slight decrease of 0.2%. However, according to the data previously disclosed by the central bank, the scale of China’s foreign exchange reserves is above 3100 billion US dollars for ten consecutive months and above 3200 billion US dollars for three consecutive months, which is still stable as a whole.

As for the changes in the scale of foreign exchange reserves in February, Wang Chunying, deputy director of the State Administration of foreign exchange and spokesman, said that in February 2021, China’s foreign exchange market will be stable and the market expectation will be more rational. Novel coronavirus pneumonia vaccine, major national fiscal policy and inflation expectations are the main factors influencing the international financial market. The US dollar index has risen, the main asset prices of major national bonds have fallen, exchange rate conversion and asset price changes have been combined.

“The scale of foreign exchange reserves in February remained stable on the whole, with a slight decline of US $5.7 billion on a month on month basis. Valuation factors were the main reasons for the slight decline of the scale of foreign exchange reserves in February.” Wen bin, chief researcher of China Minsheng Bank, said that from the perspective of valuation, affected by the good progress of vaccination, the gradual effectiveness of epidemic prevention and control, and the optimistic outlook of the market for the US economic recovery, the US dollar index rose slightly in February. Considering the effects of exchange rate conversion and asset price changes, valuation factors led to the reduction of foreign exchange reserves this month.

Wen bin further pointed out that from the perspective of real trade and cross-border capital flow, the global economic recovery has improved, and the recovery situation has improved, which has led to the recovery of demand. In the first two months of this year, China’s exports denominated in US dollars increased by 60.6% year-on-year, which is good for maintaining a stable scale of foreign exchange reserves. At the same time, cross-border capital flow has formed a support for the scale of foreign exchange reserves. “However, the valuation factor is still the leading factor. After real trade and cross-border capital flows offset the valuation effect, the scale of foreign exchange reserves still fell slightly in February.”

Wang Xingping, a researcher at the inclusive financial center of Nanjing University, told Beijing Business Daily that the scale of foreign exchange reserves decreased slightly in February, which is also related to the composition of China’s foreign exchange reserves and the US dollar monetary assets of China and Africa. When the value of the US dollar rises, the value of such non US dollar monetary assets declines relatively, and the scale of foreign exchange reserves shrinks.

When talking about the future trend of China’s foreign exchange reserves, Wang Chunying said that looking forward to the future, global epidemic prevention and control and economic recovery are still facing more uncertainties, and the international financial market is volatile. However, China will better coordinate the epidemic prevention and control and economic and social development, maintain the basic balance of international payments, which is conducive to the basic stability of the scale of foreign exchange reserves.

However, Wen bin also stressed that global epidemic prevention and control and economic recovery are still facing greater uncertainty. The recent rapid rise in commodity prices, rising inflation expectations in major economies, and increased volatility in the international financial market will disturb the stability of the scale of foreign exchange reserves. “Especially with the large-scale vaccination, the impact of the epidemic will gradually weaken, the economic recovery of major countries may increase, and the dollar index may still rebound, which will further cause the depreciation of non dollar currencies and capital outflow of emerging market economies. We should pay special attention to these unstable and uncertain factors and be prepared for them.”

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