Q: The State Administration of Foreign Exchange (SAFE) has just released the latest data on China's foreign exchange reserves. Could you explain why China's foreign exchange reserves for March 2021 changed? What would you say about the future trends of China's foreign exchange reserves?

A: By the end of March 2021, China's foreign exchange reserves recorded US$3.17 trillion, down by US$35 billion or 1.09% month on month.

In March, China's foreign exchange market performed stably, featuring balanced supply and demand. In global financial markets, due to the COVID-19 pandemic and progress in vaccine, as well as fiscal and monetary policy expectations of the major countries, the US Dollar Index climbed, the bond prices of the major countries dropped and the global stock markets rallied. Under the combined effect of foreign exchange rate conversion and asset price changes, the volume of China’s foreign exchange reserves dropped in the month.

Looking ahead, as the rest of the world will continue to grapple with COVID-19, the global economic recovery and global financial market will still face many uncertainties and destabilizing factors. However, China’s economy will gain momentum and more positive factors will emerge, which will be favorable for maintaining the general stability of China’s foreign exchange reserves.