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 foreign exchange reserves of March 2022? What will be the future trends?

A: By the end of March 2022, China’s foreign exchange reserves stood at US$3.1880 trillion, seeing a decline of US$25.8 billion, or 0.8% lower from the end of February.

In March 2022, China’s cross-border capital inflows generally picked up, and supply and demand in the foreign exchange market remained basically balanced. The international financial market witnessed a rise in the US dollar index and a fall in bond prices of major countries due to the monetary policies of major countries, geopolitical situation, and COVID-19 pandemic. Denominated in the US dollar, China’s foreign exchange reserves declined this month due to the combined effects of currency translation and asset price changes.

At present, the world still faces a protracted COVID-19 pandemic, increasingly complex external circumstances, and the volatile global financial market. However, by adhering to the general principle of prioritizing stability and seeking progress while maintaining stability, China will continue to coordinate COVID-19 response and economic development, and keep its strong economic resilience and sound long-term economic fundamentals unchanged, which will help to stabilize the foreign exchange reserves.