08
2021
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01
Foreign reserves return to the $3.2 trillion mark, a new high since May 2016
In 2020, China's foreign exchange reserves achieved a "good result" of $108.6 billion billion ". On January 7, the latest data released by the State Administration of Foreign Exchange showed that as of the end of December 2020, the size of China's foreign exchange reserves was $3216.5 billion billion, up $38 billion or 1.2 percent from the end of November. Foreign exchange reserves are back at the $3.2 trillion mark, the highest since May 2016. The reason for the increase in foreign exchange reserves in December last year is still the exchange rate conversion and asset price changes and other comprehensive factors, the State Administration of Foreign Exchange Deputy Director, spokesman Wang Chunying interpreted that in December 2020, China's foreign exchange market operation is generally stable, market transactions rational and orderly. In international financial markets, the dollar index fell and non-dollar currencies and asset prices in major countries rose, influenced by the progress of the new coronary pneumonia vaccine and the monetary and fiscal policies of major countries. Foreign exchange reserves are denominated in U.S. dollars, non-U.S. dollar currencies converted into U.S. dollars after the increase in the amount, coupled with the rise in asset prices and other factors, the size of foreign exchange reserves increased in the month. Minsheng Bank chief researcher Wen Bin told reporters that from the main exchange rate changes, the dollar exchange rate index fell 2.1 percent in December to close at 89.9, non-dollar currencies rose relative to the dollar as a whole; from the asset price changes, the major national asset prices rose as a whole. Taking into account the effects of exchange rate translation and asset price changes, foreign exchange reserves form an increase in valuation. At the same time, real trade and cross-border capital flows also contributed to the growth of foreign exchange reserves in December. Wen Bin said that major overseas economies as a whole are showing a recovery trend, and the rebound in overseas economic prosperity will help drive the increase in external demand and form a positive impact on my country's exports. The capital market as a whole is improving, and cross-border funds are flowing in. Trade and cross-border capital inflows contribute to the size of foreign exchange reserves. Looking forward to the future situation of foreign exchange reserves, the mainstream view is that China's foreign exchange reserves will continue to remain stable. Wang Chunying said that looking ahead, the world economic situation is complex and severe, the derivative risks caused by the impact of the epidemic cannot be ignored, and there are still many uncertainties in the international financial market. However, China's foreign exchange market has the conditions to continue to maintain a stable and balanced operation, and the scale of foreign exchange reserves will be generally stable. Wen Bin also said that the size of China's foreign exchange reserves will continue to remain stable. On the one hand, China's economic recovery continues to improve, and the economy will be able to achieve positive growth in 2020 and maintain a global lead, laying a solid foundation for maintaining a stable scale of foreign exchange reserves. On the other hand, my country's macro-control, foreign exchange management and other policies have reviewed the situation. Since 2020, the use of "counter-cyclical adjustment factors" has been used to adjust the foreign exchange risk reserve ratio of forward foreign exchange sales, cross-border financing macro-prudential adjustment parameters, and domestic enterprises. The macro-prudential adjustment coefficient of overseas lending guides market expectations, promotes the two-way fluctuation of the RMB exchange rate at a balanced and reasonable level, and maintains the basic balance of cross-border capital flow and the smooth operation, to provide a guarantee for the stability of the size of foreign exchange reserves. On January 7, the central bank and the State Administration of Foreign Exchange announced that they had decided to lower the macro-prudential adjustment parameter for cross-border financing from 1.25 to 1. This follows the reduction of the macro-prudential adjustment parameter for cross-border financing of financial institutions from 1.25 to 1 in December last year. Guan Tao, global chief economist at BOCI Securities, previously told the Securities Times that lowering the macro-prudential adjustment parameters for cross-border financing is a counter-cyclical adjustment, as well as a temporary policy exit in response to the epidemic. The RMB exchange rate has continued to appreciate for several months, through the macro-prudential coefficient counter-cyclical adjustment, release signals, promote market expectations differentiation, promote foreign exchange balance.
In 2020, China's foreign exchange reserves achieved a "good result" of $108.6 billion billion ". On January 7, the latest data released by the State Administration of Foreign Exchange showed that as of the end of December 2020, the size of China's foreign exchange reserves was $3216.5 billion billion, up $38 billion or 1.2 percent from the end of November.
Foreign exchange reserves are back at the $3.2 trillion mark, the highest since May 2016. The reason for the increase in foreign exchange reserves in December last year is still the exchange rate conversion and asset price changes and other comprehensive factors, the State Administration of Foreign Exchange Deputy Director, spokesman Wang Chunying interpreted that in December 2020, China's foreign exchange market operation is generally stable, market transactions rational and orderly. In international financial markets, the dollar index fell and non-dollar currencies and asset prices in major countries rose, influenced by the progress of the new coronary pneumonia vaccine and the monetary and fiscal policies of major countries. Foreign exchange reserves are denominated in U.S. dollars, non-U.S. dollar currencies converted into U.S. dollars after the increase in the amount, coupled with the rise in asset prices and other factors, the size of foreign exchange reserves increased in the month.
Minsheng Bank chief researcher Wen Bin told reporters that from the main exchange rate changes, the dollar exchange rate index fell 2.1 percent in December to close at 89.9, non-dollar currencies rose relative to the dollar as a whole; from the asset price changes, the major national asset prices rose as a whole. Taking into account the effects of exchange rate translation and asset price changes, foreign exchange reserves form an increase in valuation.
At the same time, real trade and cross-border capital flows also contributed to the growth of foreign exchange reserves in December. Wen Bin said that major overseas economies as a whole are showing a recovery trend, and the rebound in overseas economic prosperity will help drive the increase in external demand and form a positive impact on my country's exports. The capital market as a whole is improving, and cross-border funds are flowing in. Trade and cross-border capital inflows contribute to the size of foreign exchange reserves.
Looking forward to the future situation of foreign exchange reserves, the mainstream view is that China's foreign exchange reserves will continue to remain stable. Wang Chunying said that looking ahead, the world economic situation is complex and severe, the derivative risks caused by the impact of the epidemic cannot be ignored, and there are still many uncertainties in the international financial market. However, China's foreign exchange market has the conditions to continue to maintain a stable and balanced operation, and the scale of foreign exchange reserves will be generally stable.
Wen Bin also said that the size of China's foreign exchange reserves will continue to remain stable. On the one hand, China's economic recovery continues to improve, and the economy will be able to achieve positive growth in 2020 and maintain a global lead, laying a solid foundation for maintaining a stable scale of foreign exchange reserves. On the other hand, my country's macro-control, foreign exchange management and other policies have reviewed the situation. Since 2020, the use of "counter-cyclical adjustment factors" has been used to adjust the foreign exchange risk reserve ratio of forward foreign exchange sales, cross-border financing macro-prudential adjustment parameters, and domestic enterprises. The macro-prudential adjustment coefficient of overseas lending guides market expectations, promotes the two-way fluctuation of the RMB exchange rate at a balanced and reasonable level, and maintains the basic balance of cross-border capital flow and the smooth operation, to provide a guarantee for the stability of the size of foreign exchange reserves.
On January 7, the central bank and the State Administration of Foreign Exchange announced that they had decided to lower the macro-prudential adjustment parameter for cross-border financing from 1.25 to 1. This follows the reduction of the macro-prudential adjustment parameter for cross-border financing of financial institutions from 1.25 to 1 in December last year.
Guan Tao, global chief economist at BOCI Securities, previously told the Securities Times that lowering the macro-prudential adjustment parameters for cross-border financing is a counter-cyclical adjustment, as well as a temporary policy exit in response to the epidemic. The RMB exchange rate has continued to appreciate for several months, through the macro-prudential coefficient counter-cyclical adjustment, release signals, promote market expectations differentiation, promote foreign exchange balance.