The State Administration of Foreign Exchange (SAFE) has recently released the data on banks' foreign exchange settlement and sales as well as their foreign-related receipts and payments for customers for August 2019. Wang Chunying, SAFE Press Spokesperson and Chief Accountant, answered relevant media questions.
Q: Could you brief us on the changes in China's foreign exchange receipts and payments for August 2019?
A: In this month, the deficit in banks' foreign exchange settlement and sales contracted and the foreign exchange market maintained a basic equilibrium between supply and demand. Despite a higher deficit in foreign-related receipts and payments recorded in the non-banking sector including individuals and enterprises, the foreign exchange market sustained a basic equilibrium between supply and demand, considering foreign exchange receipts and payments in the banking sector. On the one hand, the deficit in banks' foreign exchange settlement and sales shrank steadily, reaching a slight USD 5.4 billion in August, down by 12% month-on-month and 64% year-on-year. On the other hand, foreign exchange reserves stayed stable and hit USD 3.1072 trillion by the end of August, up by USD 3.5 billion month-on-month.
Foreign exchange market expectations remained stable and foreign exchange supply and demand through major channels were steady and orderly. Market players' desire to settle foreign exchange was reinforced and their desire to sell foreign exchange remained stable. In August, the foreign exchange settlement ratio, measure of players' desire to settle foreign exchange, or the ratio of foreign exchange sold by customers to banks to their foreign-related foreign exchange receipts, stood at 73%, up by 6 percentage points month-on-month. The foreign exchange sales ratio, measure of players' desire to purchase foreign exchange, or the ratio of foreign exchange bought by customers from banks to their foreign-related foreign exchange payments, arrived at 69%, consistent with a month earlier. Under this context, trade in goods and direct investment remained as the major contributors to the surplus in foreign exchange settlement and sales for the month; enterprises' purchases of foreign exchange with ROI represented a seasonal decline; individuals' settlement of foreign exchange rose by 8% year-on-year and their purchases of foreign exchange fell by 17%.
China's foreign exchange market remained stable, which was more obvious amid the complex and changing external environment. Despite more fluctuating external environment since the beginning of August, China's foreign exchange market was in a good order, and market players' trading behaviors were rational and orderly, indicating China's foreign exchange market was more mature and more adaptable to changes in external environment and also suggesting the significant support from China's economic fundamentals. Going forward, we will work to ensure the continuity and stability of China's foreign exchange administration policies, further liberalize and facilitate cross-border trade and investment, refine the management framework for cross-border capital flows that are aligned with a higher level of opening, so as to further solidify the foundation for stable performance of China's foreign exchange market.
