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 August 2021? What will be the future trends?
A: By the end of August 2021, China’s foreign exchange reserves stood at US$3.2321 trillion, down US$3.8 billion or 0.12 percent from the end of July.

In August, China’s foreign exchange market operated smoothly, with domestic supply and demand generally balanced. On the international financial market, due to factors such as the COVID-19 pandemic situation and major countries’ fiscal and monetary policies expectations, the US dollar index slightly increased, bond prices of major countries fell, and global stock markets rose. Given that China’s foreign exchange reserves are priced in the US dollar and non-dollar currencies would shrink in conversion, the decline in value was attributed to the combined impacts of currency translation and changes in asset prices.

At present, triggered by the raging COVID-19 pandemic, the external environment is intricate and the global financial situation faces uncertainties and fluctuations. In spite of that, China has continued to consolidate and expand its achievements in epidemic prevention and control, as well as economic and social development. The Chinese economy maintains a steady recovery, and its development quality continues to improve, which would enhance the overall stability of China’s foreign exchange reserves.