Q: The State Administration of Foreign Exchange (SAFE) has just released the latest data regarding China’s foreign exchange reserves. Could you explain the causes for the changes in China’s foreign exchange reserves of January 2022? Also, what will be the future trends?

A: By the end of January 2022, China’s foreign exchange reserves stood at US$3.2216 trillion, down by 0.88% or US$28.5 billion from the end of 2021.

In January 2022, China’s foreign exchange market has maintained stable operation, with domestic supply and demand for foreign exchange remaining basically balanced. In the international financial market, affected by factors such as monetary policy expectations in major economies, geopolitics and macroeconomic data, the US dollar index has increased and the global financial asset prices have generally fallen. The volume of China’s foreign exchange reserves, dominated in the US dollar, declined this month due to the combined impacts of currency translation and assets price change.

With the continuous spreading of the COVID-19 pandemic and mounting external uncertainties, the international financial market becomes highly volatile. However, China still unswervingly promotes high-quality development and adheres to the general principle of seeking progress while maintaining stability. As a result, China’s economic resilience remained strong with great potential and sound long-term fundamentals, which will offer strong support for the overall stability of China’s foreign exchange reserves.