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 April 2022? What will be the future trends?

A: By the end of April 2022, China’s foreign exchange reserves stood at US$3.1197 trillion, down by US$68.3 billion, or 2.14%, from the end of March.

In April 2022, China’s overall cross-border capital continued with the trend of net inflow, while supply and demand of China’s foreign exchange market were basically balanced. In the international financial market, influenced by factors like the expectations of monetary policies in major countries, geopolitical situation and COVID-19 pandemic, the US dollar index rose sharply, and global financial asset prices fell significantly. Denominated in the US dollar, China’s foreign exchange reserves declined this month due to the combined effects of non-US dollar currency translation decrease and asset price changes.

At present, with the increasingly volatile and uncertain external circumstances, the world economic recovery has been slowing down, and the international financial market has seen more fluctuations. In contrast, by responding to COVID-19 and pursuing economic and social development in a well-coordinated way, China has sustained its strong resilience, great potential, and broad room for maneuver in economy with its fundamentals of sound long-term growth unchanged, which is conducive to the overall stability of the foreign exchange reserves.