By Wang Shen
The People's Bank of China announced on June 7 that China's foreign exchange reserves were $3.11 trillion by the end of May, they had decreased by $14.2 billion from April, as reported by the Shanghai Securities News.
A representative from the State Administration of Foreign Exchange (SAFE) pointed out that the reasons, which have caused China's forex reserves to decrease slightly, include that of the U.S. dollar index which had increased by 2.3 percent in the global financial market, the non-US dollar currencies had declined, and the global asset prices had risen.
E Yongjian, a financial analyst from the Bank of Communications stated that the Japanese yen had edged up 0.5 percent against the US dollar, and the euro and sterling had fallen by about 3.2 percent and 3.5 percent against the US dollar, respectively. E estimated that the decrease in the forex reserves was $20 billion due to the changes in the currency exchange rate.
Wen Bin, a researcher from the China Minsheng Bank calculated that in May, the rate of return for the US and Germany 10-year bonds had decreased by 0.09 percent and 0.22 percent, respectively, which had caused the price of China's holding foreign bonds to grow upward and the book value of the forex reserves to increase as well.
E said that without considering the currency exchange factor, the forex reserves in May should have been slightly raised. The cross-border capital flows remained stable, and funds outstanding for foreign exchange were expected to be slightly increased.
In 2018, China's employment rate and the price of commodities stayed stable. The supply and demand in the foreign exchange market have reached a balance.
The above representative stated that China's economy would have the opportunity and capability to maintain a stable growth and the Chinese foreign exchange market will better adapt to the changes in the external environment. Based on a combination of domestic and international factors, China's foreign exchange reserves are expected to maintain stability in the future.
