The State Administration of Foreign Exchange (SAFE) has recently released the data on banks' foreign exchange settlements and sales and their foreign-related receipts and payments for clients for February 2018, and its press spokesperson answered media questions on recent cross-border capital flows.
Q: Could you brief us on China's cross-border capital flows for February 2018?
A: The domestic foreign exchange market remained self-balanced in February 2018. First, foreign exchange supply and demand maintained a basic equilibrium in China. A deficit of USD 8.2 billion was registered in banks' foreign exchange sales and settlements in the month, higher than a month ago, but other factors that impact foreign exchange supply and demand continued to play a balancing role. For example, as banks' foreign exchange positions reduced by USD 6 billion, foreign exchange supply increased in the month. Second, non-banking sectors such as enterprises witnessed slight fluctuations in foreign-related receipts and payments. A deficit of USD 6.2 billion was recorded in foreign-related receipts and payments in the month, versus a surplus in January because of high export receipts among Chinese enterprises and foreign capital inflows in the run-up to the Chinese Spring Festival. In the two months, foreign-related receipts and payments registered an accumulated surplus of USD 18.5 billion, versus a deficit of USD 7.8 billion for the same month last year. In addition, the balance of foreign exchange reserves as at the end of February declined month on month due to exchange rate conversion and recovery of asset prices, but the supply and demand of foreign exchange still maintained an equilibrium.
The supply or demand of foreign exchange through major channels stayed stable. According to the data for January and February, after adjustment of the impact of the Chinese Spring Festival, the surplus of foreign exchange sales and settlements under trade in goods has grown stably since the beginning of the year, and foreign exchange sales and settlements under trade in goods for clients by banks recorded a surplus of USD 35.8 billion, up by 16% year on year; foreign exchange sales and settlements under direct investment continued with a surplus; foreign exchange settlements under FDI continued to rise, and foreign exchange purchases under ODI remained stable in January and February; enterprises' ROI and personal purchases of foreign exchange fell stably.
Recently, despite heightened volatility of the global financial markets, domestic economy has operated stably, market expectations have been reasonably diverged, the RMB exchange rate against US dollars has continued with two-way fluctuations and remained stable, and the domestic supply and demand of foreign exchange has maintained a self-balance, indicating a stronger momentum for two-way cross-border capital flows and general equilibrium at present.
