Q: The latest data released by the People's Bank of China on foreign exchange reserves show that China's foreign exchange reserves as at the end of July 2018 rose by USD 5.8 billion month on month. Could you tell us why such a change occurred? What would you say about the future trends of foreign exchange reserves?
A: As at the end of July 2018, China's foreign exchange reserves stood at USD 3,117.9 billion, up by USD 5.8 billion or 0.19% month on month.
In July, China's cross-border capital flow was generally stable and the foreign exchange market maintained a basic equilibrium in supply and demand. Under the combined impact of the basically unchanged US dollar index, the slightly fluctuated price of financial assets, the exchange rate translation of major non-USD currencies and the asset price changes in global financial markets, China’s foreign exchange reserves steadily increased.
Since the beginning of this year, the global financial markets have become increasingly volatile, witnessing the rising of both the exchange rate and interest rate of US dollar. Some emerging economies have been hit hard, global trade frictions have intensified, and the complexity and uncertainty of the external environment have both increased remarkably. Against this backdrop, China's economy remained stable and gained momentum for growth. Preliminary results have been achieved in guarding against and mitigating financial risks, with the economic structure continuously optimized, the foreign exchange market operating stable in general, and the flexibility of RMB exchange rate remarkably strengthened.
Looking ahead, the international economic and financial environments will be complex and tough, global trade protectionism will continue aggravating, the macroeconomic policies of major countries will be diverging and the international financial market fluctuations will increase. However, China's economic and policy fundamentals are expected to still remain robust and cross-border capital flow and foreign exchange market operation will be able to maintain overall stability. Under such factors at home and abroad, China's foreign exchange reserves are expected to remain stable in fluctuation.
