As shown in the statistics of the State Administration of ForeignExchange (SAFE), in June 2020, the amount of foreign exchange settlement andsales by banks was RMB 1081.6 billion and RMB 1075.5 billion, respectively,with a settlement of RMB 6.0 billion. In the US dollar terms，the amount of foreignexchange settlement and sales by banks was USD 152.6 billion and USD 151.8billion, respectively, with a settlement of USD 0.9 billion. In particular, the amount of foreign exchange settlementand sales by banks for customers was RMB 957.4 billion and RMB 979.1 billion,respectively, with a deficit of RMB 21.7 billion; the amount of foreignexchange settlement and sales for banks themselves was RMB 124.1 billion andRMB 96.5 billion, respectively, with a settlement of RMB 27.6 billion. Duringthe period, newly signed contract amount of forward foreign exchange settlementand sales was RMB 104.3 billion and RMB 66.1 billion, respectively, with a net newlysigned contract amount of forward foreign exchange settlement of RMB 38.2billion. At the end of June, outstanding amount of forward foreign exchange settlementand sales by the end of the current period was RMB 580.9 billion and RMB 464.4billion, respectively, with a net outstanding amount of forward foreignexchange settlement of RMB 116.4 billion; the net Delta exposure of outstandingoptions was RMB -320.6 billion.
During January to June 2020, the accumulative amount of foreignexchange settlement and sales by banks was RMB 6702.5 billion and RMB 6149.4billion, with an accumulative settlement of RMB 553.1 billion. In the US dollarterms, the accumulative amount of foreign exchange settlement and sales bybanks was USD 953.5 billion and USD 874.9 billion, with an accumulativesettlement of USD 78.6 billion. In particular, the accumulative amount offoreign exchange settlement and sales by banks for customers was RMB 5696.0billion and RMB 5346.6 billion, respectively, with an accumulative settlementof RMB 349.4 billion; the accumulative amount of foreign exchange settlementand sales for banks themselves was RMB 1006.5 billion and RMB 802.9 billion,respectively, with an accumulative settlement of RMB 203.6 billion. During theperiod, newly signed contract amount of forward foreign exchange settlement andsales was RMB 804.0billion and RMB 393.6 billion, respectively, with a net newlysigned contract amount of forward foreign exchange settlement of RMB 410.4 billion.
In June 2020, the amount of cross-border receipts and payments by non-bankingsectors was RMB 2563.8 billion and RMB 2412.4 billion, respectively, with a surplusof RMB 151.5 billion. DuringJanuary to June 2020, the accumulative amount of cross-border receipts and paymentsby non-banking sectors was RMB 13407.0 billion and RMB 13391.4 billion,respectively, with an accumulative surplus of RMB 15.6 billion.
In the US dollar terms, in June 2020, the amount of cross-border receiptsand payments by non-banking sectors was USD 361.8 billion and USD 340.4billion, respectively, with a surplus of USD 21.4 billion. During January to June 2020, the accumulative amount of cross-borderreceipts and payments by non-banking sectors was USD 1906.6 billion and USD 1904.5billion, respectively, with an accumulative surplus of USD 2.0 billion.
In addition, the State Administrationof Foreign Exchange revised the data on cross-border receipts and payments bynon-banking sectors from January to May 2020 based on the latest data, andreleased it through the “Data and Statistics” section of the official websiteof the State Administration of Foreign Exchange.
Addendum: Glossaryand relevant definitions
Balance of payments(BOP) refers to all economic transactionsbetween residents and non-residents.
Foreignexchange settlement and sales by banks refers to settlement and sale transaction that bank executes for customersand for the banks themselves, including statistic data onsettlements of forward contracts for foreign exchange settlementand sales and the exercises of option, and excludingthe transactions in the interbank foreign exchange market. The statistic reporting date of Foreign exchangesettlement and sales by banks should be the trade day of theForeignexchange settlement and sales transaction. By definition, foreignexchange settlement means foreign exchange holders sell foreignexchange to designated foreign exchange bank, and foreignexchange sales means designated bank sells foreign exchange to foreign exchange buyers. The net position of foreign exchange settlement andforeign exchange sales could be position squared throughtransactions on the inter-bank foreign exchange market, and it is one ofthe major contributors to the country’sforeign exchange reserve fluctuation, though it is not equal to netchange in foreign exchange reserves during the same period
Unlikethe principle of balance-of-payments statistics, which cover the transactionsbetween residents and non-residents, foreign exchange settlement and sales bybanks only cover transactions of RMB and foreign currencies between banks and customers or on banks for themselves.
Thenewly signed contract amount of forward foreign exchange settlement and sales refers to the binding forward contract between designated foreignexchange bank and client that predetermines foreign exchange currency, amount,exchange rate and tenor which to be executed upon maturity. Thenewly signed forward contract enables corporate to lock inadvance the exchange rate for the purchase or sale of a currency on a futuredate to manage relevant foreign exchange risk arising fromRMB volatility. In general, bank will hedge its foreign exchange risk exposures arise from the newly signed forward contract in the Interbank foreign exchange market. For example,when bank has net foreign exchange long position, bankwill short the equivalent amount of foreign exchange in the Interbank foreignexchange market in advance, or vice versa. Therefore, the newly signedcontract amount of forward foreign exchange settlement and sales is also one of contributors to China’s foreign exchange reserve fluctuation.
Theunwind amount of forward foreign exchange settlement and sales refers to, where client is unable to perform the original forwardcontract due to change in its real demand, client to fully or partially closeits forward position by executing another deal with opposite direction to theoriginal contract.
Therolling amount of forward foreign exchange settlement and sales refers to client to adjust the settlement date of original contract dueto change in its real demand.
Theoutstanding amount of forward foreign exchange settlement and sales by the endof the current period refers to the total amount of forwardcontracts accumulated from all non-matured forward contracts with client. Thenewly signed contractamount and the outstanding amount should satisfy the equationthat: theoutstanding amount of forward foreign exchange settlement and sales by the endof the current period = theoutstanding amount of forward foreign exchange settlement and sales at the endof the previous period + the newly signed contract amount of forward foreignexchange settlement and sales for the period - settlements of forwardcontracts for foreign exchange settlement and sales for the period - the unwindamount of forward foreign exchange settlement and sales for the period.
The net Deltaexposure of outstanding options refers to the implied foreignexchange spot risk exposure from outstanding option contracts that bank executedwith client. Bank shall hedge such risk in the foreign exchange market for risk management during deal life cycle.
The cross-borderreceipts and payments bynon-banking sectors refers to the receipts andpayments between domestic non-banking sectors (including institutional and individual residents)and non-residentsthrough domestic banks, excluding receipts and payments in cash. In particular,the statisticsincludescross-border receipts and payments between non-banking sectors andnon-residents through domestic banks (including RMB and foreign currency), and domesticreceipts and payments between non-banking sectors and non-residents throughdomestic banks (temporarily excluding domestic receipts and payments in RMBbetween individual residents and non-resident individuals). Data are collected whencustomers conduct receipts and payments with non-resident counterparties atdomestic banks. Specifically, the receipts refer to the capitalof non-bankingsectors received fromnon-residents via domestic banks; the payments refer to the capitalof non-bankingsectors paid to non-residents via domestic banks.
Thecross-border receipts and payments bynon-banking sectors is basedon cash basis, different from the accrual basis required by the Balance of Payments Statistics. The statistics merely reflectsthe cash flows between non-bankingsectors and non-residents and doesnot include barter transactions or transactions with non-residents conducted by the banks themselves. Therefore, the scope of the statistics is narrower than thatof the Balance of Payments Statistics.
