On February 7, the latest statistics released by the State Administration of Foreign Exchange showed that against the backdrop of intensified domestic and foreign financial turmoil, my country's foreign exchange reserves stopped falling and rebounded slightly, with a slight increase of US$6.7 billion. At the end of the month, the balance of foreign exchange reserves was US$3209 billion, stabilizing at more than US$3.2 trillion for 14 consecutive months.
It is worth noting that against the backdrop of international gold prices hitting new highs, during the same period, my country's gold reserves denominated in US dollars reached US$206.5 billion, an increase of US$15.2 billion on a month-on-month basis, of which the positive valuation effect was approximately US$14.8 billion.
Guan Tao, global chief economist at Bank of China Securities, analyzed that from an international perspective, the Federal Reserve finally pressed the pause button in January this year after three consecutive interest rate cuts since September last year. As the Fed's easing expectations weakened and Trump's trading correction, the US dollar index and US Treasury yields surged and fell during the month, and both closed at a level basically the same as the end of the previous year. The major global stock indexes further rose, which is partially beneficial to the positive valuation effect of my country's foreign exchange reserves.
From the domestic perspective, the RMB exchange rate fell first and then rose, and rose to a level slightly stronger than the closing at the end of last year. "The elasticity of the two-way fluctuation of the RMB exchange rate has increased, and the scale of foreign exchange reserves has remained basically stable, fully reflecting the resilience of the domestic foreign exchange market." Guan Tao said. During the same period, the domestic interbank market had an average monthly spot inquiry in RMB foreign exchange transactions of US$37.2 billion, setting a record for the highest transaction in the same period.
Wen Bin, chief economist of China Minsheng Bank, said that the combined effect of factors such as exchange rate conversion and asset price changes, the scale of foreign exchange reserves increased at the end of January.
In January, the US dollar index fell, and global financial asset prices rose overall due to factors such as macroeconomic data of major economies, monetary policies and expectations of major central banks. In terms of currency, the US dollar index (DXY) fell 0.1% to 108.4, and non-US dollar currencies generally appreciated. In terms of assets, the Barclays Global Aggregate Total Return Index USD Hedged, which is priced in USD, rose 0.4%; the S&P 500 stock index rose 2.7%.
At the same time, as of the end of January, my country's total gold reserves were 73.45 million ounces, an increase of 360,000 ounces month-on-month, making it a net increase in gold reserves for three consecutive months. At the end of the month, gold reserves were about 6.4% of the foreign exchange reserves, and the proportion also hit a record high. Guan Tao said that this shows that my country's international reserve assets diversification is still advancing steadily.
The current uncertainty of the external environment has further increased, friction in the international trade field has intensified, and the international financial market continues to have a high volatility. Under such a background, what will be the future trend of my country's foreign exchange reserve scale?
"It is expected that the Federal Reserve will still face the risks of insufficient tightening and excessive tightening this year. The Federal Reserve's interest rate policy rhythm and intensity driven by data are still uncertain. In addition, due to the tense trade situation and geopolitical conflicts, fluctuations in the international financial market are inevitable, which will continue to disturb the scale of my country's foreign exchange reserves." Guan Tao said, but as my country further deepens reforms in an all-round way, implements active and effective macroeconomic policies, prevents and resolves risks and external shocks in key areas, and expands domestic demand in all aspects, takes effect, the domestic economy continues to recover and improve, which is expected to provide fundamental support for the stable scale of RMB exchange rate and foreign exchange reserves.
Wen Bin also said that with the increasing diversification of my country's international trade products and regional structure, the resilience of foreign trade has been continuously enhanced, laying a solid foundation for the overall stability of the balance of payments and providing support for the basic stability of the scale of foreign exchange reserves.
