The State Administration of Foreign Exchange (SAFE) has recently released data on foreign exchange settlement and sales by banks as well as cross-border receipts and payments by non-banking sectors in January 2022. The SAFE Deputy Administrator and Press Spokesperson Wang Chunying answered media questions on China’s foreign exchange receipts and payments of January 2022.
Q: At the beginning of the New Year, could you brief us on China’s foreign exchange receipts and payments in January 2022?
A: China’s foreign exchange market remained stable. In January, the foreign exchange settlement and sales by banks recorded a surplus of US$27.8 billion. Taking into account of factors like forward settlement and sales of foreign exchange and option trading, the supply and demand of domestic foreign exchange were basically in balance. Meanwhile, the foreign-related receipts and payments by non-banking sectors also posted a surplus of US$58.4 billion, nearly 90% of which came from trade in goods. It attributed to the influences of factors, including the increase in trade surplus in recent months and the impacts of enterprises' centralized collection of payments before the Spring Festival.
Transactions in the foreign exchange market were in a rational and orderly manner. In January, the settlement ratio (the ratio of foreign exchanges sold by clients to banks to their foreign-related foreign exchange receipts) and the sales ratio (the ratio of foreign exchange bought by clients from banks to their foreign-related foreign exchange payments) reached 67% and 62% respectively, an increase of 2.4% and 0.2% separately from the end of last month, but roughly the same as the monthly average in 2021. It indicated that the willingness of market entities to settle and purchase foreign exchange remained stable.
The two-way cross-border investment remained active. In January, net inflows of cross-border direct investment funds were up by 9% year on year to US$11.4 billion, as inward direct investment and outward direct investment both showed an increasing trend. The scale of cross-border capital inflows and outflows under securities investment was basically the same as the monthly average level of 2021, and the overall pattern of net inflows continued.
Looking ahead into the future, the external environment remains complex and volatile, because there are still unstable and uncertain factors in the evolution of the COVID-19 pandemic and economic recovery around the world. At the same time, under mounting inflationary pressures, the shift of monetary policies in major developed economies may accelerate. However, the trend of China’s stable economic recovery has not changed, the pattern of China’s advancing opening-up in the financial market has not changed, and the overall trend of a basic equilibrium of balance of payment has not changed either. Thus, all of these will continue to play a role in stabilizing market expectation and confidence, and consolidate the foundation for the stable operation of the foreign exchange market.
