The State Administration of Foreign Exchange (SAFE) has recently released data on foreign exchange settlement and sales by banks as well as foreign-related receipts and payments by banks on behalf of clients in October 2021. The SAFE Deputy Administrator and Press Spokesperson Wang Chunying answered media questions on China’s foreign exchange receipts and payments of October 2021.
Q: Could you brief us on China’s foreign exchange receipts and payments in October 2021?
A: China’s foreign exchange market remained stable in October. In terms of the main indicators, first, the foreign exchange settlement and sales by banks recorded a surplus of US$16.5 billion, roughly at the same level as the monthly average in the third quarter. Second, the foreign-related receipts and payments of non-banking sectors also posted a surplus of US$34.8 billion, increasing from the surplus in September. This was mainly because some enterprises postponed their foreign exchange receipts from trade after the National Day Holiday. In September and October, the monthly average surplus of the foreign-related receipts and payments of non-banking sectors was similar to the monthly average since the second quarter, and the overall cross-border capital flows remained basically stable. Third, by the end of October, China’s foreign exchange reserves stood at US$3.2176 trillion, up by 0.5% from the end of September, mainly affected by currency translation and changes in global asset prices.
The foreign exchange market expectations were generally stable. According to the relevant indicators of the foreign exchange market, the expectations of market entities on foreign exchange rates were overall stable, and the rational trading pattern of “buying low and selling high” was maintained. Adjusted for the National Day Holiday factor, in September and October, the monthly average sales ratio (the ratio of foreign exchange sold by clients to banks to their foreign-related foreign exchange receipts) recorded 64%, down by 3% comparing to the average monthly level in the third quarter, indicating that the willingness of market entities to sell foreign exchange was stable with a slight decline; in September and October, the monthly average purchases ratio (the ratio of foreign exchange bought by clients from banks to their foreign-related foreign exchange payments) reached 62%, 1% lower than the average monthly level in the third quarter, indicating that the willingness of market entities to purchase foreign exchange remained stable.
Cross-border capital flows through major channels were in a rational and orderly manner. In October, cross-border capital related to the real economy, such as trade in goods and direct investment, maintained a certain scale of net inflows, reflecting the supporting role of steady recovery of the domestic economy; net increase in the domestic bonds and equities held by non-residents totaled US$11.5 billion, which was roughly at the same level as the monthly average in the third quarter. In addition, overseas study payments and profit repatriation from direct investment fell from seasonal peaks and became stable.
At present, with COVID-19 pandemic still spreading around the world, the recovery of world economy is uncertain, and some developed economies are gradually exiting from their quantitative easing monetary policies, which makes the external environment more complex and severe. However, China maintains a steady economic recovery, constantly shows development resilience and keeps the basic equilibrium of balance of payments. All these will continue to support the smooth operation of China’s foreign exchange market.
