Q: The State Administration of Foreign Exchange (SAFE) has just released the latest data on China’s foreign exchange reserves. Could you explain the causes of changes in foreign exchange reserves for June 2021? What will be the future trends?

A: By the end of June 2021, China’s foreign exchange reserves recorded US$3.214 trillion, down by US$7.8 billion or 0.24% month on month.

In June, China’s foreign exchange market operated smoothly, and market transactions remained rational. In global financial markets, the US dollar index has fluctuated upward, and the financial asset prices of major countries have generally risen due to the development in COVID-19 vaccine and the expectation of monetary and fiscal policies of major countries. Under the combined effect of foreign exchange rate conversion and asset price changes, China’s foreign exchange reserves dropped in this month.

Looking ahead, the rest of the world still grapples with COVID-19, and the global economic situation and the international financial market still face many risk factors. However, China’s economic performance has been strengthened and improved, and the internal driving force has been gradually strengthened, which will help keep foreign exchange reserves stable.