Q: The State Administration of Foreign Exchange (SAFE) has just released the latest foreign exchange reserve data. Could you explain why China's foreign exchange reserves for March 2020 changed? What would you say about the future trends of China's foreign exchange reserves?

A: As of March 2020, China posted USD 3.0606 trillion in foreign exchange reserves, down by USD 47.3 billion or 1.5% from the beginning of the year.

Along with the accelerated global spread of the coronavirus and plummeting global crude oil prices, global financial markets became highly volatile in March. The US Dollar Index rose, selected non-USD currencies were devalued against the US dollar, and asset prices were dramatically adjusted in major countries. Nonetheless, China's foreign exchange market remained generally stable and the supply and demand of foreign exchange were in balance. But due to the combined impact of exchange rate conversion and asset price changes, China's foreign exchange reserves contracted.

Under the impact from the coronavirus and geopolitics, the world economy and trade are expected to be seriously hurt and global financial markets, increasingly volatile. As China's efforts to push ahead with epidemic prevention and control along with its economic and social development are paying off, with resumption of work sped up and the real economy recovering and improving, China's economy will remain sound over the long term and continue to shore up the overall stability of China's foreign exchange reserves.