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 August 2022? What will be the future trends?

A: By the end of August 2022, China’s foreign exchange reserves stood at USD 3.0549 trillion, down by USD 49.2 billion, or 1.58%, from the end of July.

In August, China’s cross-border capital flows were in a rational and orderly way, and the domestic supply and demand of foreign exchange maintained in basic balance. In the international financial market, influenced by factors like monetary policy expectations and macroeconomic data of major countries, the US dollar index rose and the financial asset prices in the world generally fell. China’s foreign exchange reserves declined this month due to the combined effects of currency translation and asset price changes.

At present, with the external environment becoming more volatile and severe, the downward pressure on the global economy is mounting and the international financial market is highly volatile. However, China has continued to implement the efficient coordinated epidemic prevention and control as well as economic and social development. China’s in-depth implementation of a package of policies to support the economy has kept the economy operating within an appropriate range, which is conducive to the overall stability of the foreign exchange reserves.