As shown in the statistics of the State Administration of ForeignExchange (SAFE), in April 2020, the amount of foreign exchange settlement andsales by banks was RMB 1111.5 billion and RMB 1006.8 billion, respectively,with a settlement of RMB 104.7 billion. In the US dollar terms，the amount of foreignexchange settlement and sales by banks was USD 157.2 billion and USD 142.4billion, respectively, with a settlement of USD 14.8 billion. In particular,the amount of foreign exchange settlement and sales by banks for customers wasRMB 974.4 billion and RMB 889.5 billion, respectively, with a settlement of RMB84.9 billion; the amount of foreign exchange settlement and sales for banksthemselves was RMB 137.1 billion and RMB 117.3 billion, respectively, with a settlementof RMB 19.8 billion. During the period, newly signed contract amount of forwardforeign exchange settlement and sales was RMB 91.1 billion and RMB 61.9 billion,respectively, with a net newly signed contract amount of forward foreign exchangesettlement of RMB 29.3 billion. At the end of April, outstanding amount of forwardforeign exchange settlement and sales by the end of the current period was RMB 597.5billion and RMB 459.5 billion, respectively, with a net outstanding amount of forwardforeign exchange settlement of RMB 138 billion; the net Delta exposure ofoutstanding options was RMB -293.5 billion.
During January to April 2020, the accumulative amount of foreignexchange settlement and sales by banks was RMB 4541.3 billion and RMB 4163.6billion, with an accumulative settlement of RMB 377.7 billion. In the US dollarterms, the accumulative amount of foreign exchange settlement and sales bybanks was USD 648.8 billion and USD 594.9 billion, with an accumulativesettlement of USD 53.9 billion. In particular, the accumulative amount offoreign exchange settlement and sales by banks for customers was RMB 3761.6billion and RMB 3533.4 billion, respectively, with an accumulative settlementof RMB 228.2 billion; the accumulative amount of foreign exchange settlementand sales for banks themselves was RMB 779.7 billion and RMB 630.2 billion,respectively, with an accumulative settlement of RMB 149.5 billion. During theperiod, newly signed contract amount of forward foreign exchange settlement andsales was RMB 573.9 billion and RMB 255.8 billion, respectively, with a net newlysigned contract amount of forward foreign exchange settlement of RMB 318.1 billion.
In April 2020, the amount of cross-borderreceipts and paymentsby non-banking sectorswas RMB 2234.4 billion and RMB 2199.5 billion, respectively, with a surplus of RMB 35.0 billion.DuringJanuary to April 2020, the accumulative amount of cross-border receipts and paymentsby non-banking sectorswas RMB 8623.8 billion and RMB 8805.3 billion, respectively, with an accumulative deficit of RMB 181.5 billion.
In the US dollar terms, in April 2020, the amount of cross-border receiptsand payments by non-bankingsectors was USD 316.1 billion and USD 311.2 billion, respectively, with a surplus of USD 4.9 billion.DuringJanuary to April 2020, the accumulative amount of cross-border receipts and paymentsby non-banking sectorswas USD 1232.0 billion and USD 1257.8 billion, respectively, with an accumulative deficit of USD 25.8 billion.
Addendum: Glossaryand relevant definitions
Balance of payments(BOP) refers to all economic transactionsbetween residents and non-residents.
Foreignexchange settlement and sales by banks refers to settlement and sale transaction that bank executes for customersand for the banks themselves, including statistic data onsettlements of forward contracts for foreign exchange settlementand sales and the exercises of option, and excludingthe transactions in the interbank foreign exchange market. The statistic reporting date of Foreign exchangesettlement and sales by banks should be the trade day of theForeignexchange settlement and sales transaction. By definition, foreignexchange settlement means foreign exchange holders sell foreignexchange to designated foreign exchange bank, and foreignexchange sales means designated bank sells foreign exchange to foreign exchange buyers. The net position of foreign exchange settlement andforeign exchange sales could be position squared throughtransactions on the inter-bank foreign exchange market, and it is one ofthe major contributors to the country’sforeign exchange reserve fluctuation, though it is not equal to netchange in foreign exchange reserves during the same period
Unlikethe principle of balance-of-payments statistics, which cover the transactionsbetween residents and non-residents, foreign exchange settlement and sales bybanks only cover transactions of RMB and foreign currencies between banks and customers or on banks for themselves.
Thenewly signed contract amount of forward foreign exchange settlement and sales refers to the binding forward contract between designated foreignexchange bank and client that predetermines foreign exchange currency, amount,exchange rate and tenor which to be executed upon maturity. Thenewly signed forward contract enables corporate to lock inadvance the exchange rate for the purchase or sale of a currency on a futuredate to manage relevant foreign exchange risk arising fromRMB volatility. In general, bank will hedge its foreign exchange risk exposures arise from the newly signed forward contract in the Interbank foreign exchange market. For example,when bank has net foreign exchange long position, bankwill short the equivalent amount of foreign exchange in the Interbank foreignexchange market in advance, or vice versa. Therefore, the newly signedcontract amount of forward foreign exchange settlement and sales is also one of contributors to China’s foreign exchange reserve fluctuation.
Theunwind amount of forward foreign exchange settlement and sales refers to, where client is unable to perform the original forwardcontract due to change in its real demand, client to fully or partially closeits forward position by executing another deal with opposite direction to theoriginal contract.
Therolling amount of forward foreign exchange settlement and sales refers to client to adjust the settlement date of original contract dueto change in its real demand.
Theoutstanding amount of forward foreign exchange settlement and sales by the endof the current period refers to the total amount of forwardcontracts accumulated from all non-matured forward contracts with client. Thenewly signed contractamount and the outstanding amount should satisfy the equationthat: theoutstanding amount of forward foreign exchange settlement and sales by the endof the current period = theoutstanding amount of forward foreign exchange settlement and sales at the endof the previous period + the newly signed contract amount of forward foreignexchange settlement and sales for the period - settlements of forwardcontracts for foreign exchange settlement and sales for the period - the unwindamount of forward foreign exchange settlement and sales for the period.
The net Deltaexposure of outstanding options refers to the implied foreignexchange spot risk exposure from outstanding option contracts that bank executedwith client. Bank shall hedge such risk in the foreign exchange market for risk management during deal life cycle.
The cross-borderreceipts and payments bynon-banking sectors refers to the receipts andpayments between domestic non-banking sectors (including institutional and individual residents)and non-residentsthrough domestic banks, excluding receipts and payments in cash. In particular,the statisticsincludescross-border receipts and payments between non-banking sectors andnon-residents through domestic banks (including RMB and foreign currency), and domesticreceipts and payments between non-banking sectors and non-residents throughdomestic banks (temporarily excluding domestic receipts and payments in RMBbetween individual residents and non-resident individuals). Data are collected whencustomers conduct receipts and payments with non-resident counterparties atdomestic banks. Specifically, the receipts refer to the capitalof non-bankingsectors received fromnon-residents via domestic banks; the payments refer to the capitalof non-bankingsectors paid to non-residents via domestic banks.
The cross-border receiptsand payments by non-banking sectors is based on cash basis, different from the accrual basis required by the Balance of Payments Statistics. The statistics merely reflects the cash flows between non-bankingsectors and non-residents and does not include bartertransactions or transactions with non-residents conducted by the banks themselves. Therefore, the scope of the statistics is narrowerthan that of the Balance of Payments Statistics.
