Nation’s forex reserves to maintain stability despite fall in April
China’s foreign exchange reserves fell sharply in April as the prices of global financial assets declined significantly amid a strengthening US dollar, but the solid fundamentals of the Chinese economy will continue to support overall stability in foreign exchange reserves, an official said.
The country’s foreign exchange reserves fell to $ 3.12 trillion in April, down $ 68.3 billion or 2.14 percent from the end of March, data from the State Administration of Foreign Exchange ( SAFE) showed on Saturday.
“The decline in forex reserves was mainly attributed to the combined impact of the surge in the
US Dollar Index and the sharp decline in financial asset prices globally, as well as other factors including the ongoing pandemic, geopolitical volatility and monetary policy expectations in major economies,” said Wang Chunying, deputy head and spokesperson of the SAFE.
In April, the US Dollar Index rose to 103.05, its highest since January 2017, up 4.7 percent.
The nation’s forex reserves is denominated in US dollars, so the value of non- dollar currencies would decrease if they are converted into US dollars, which, along with changes in asset prices and other factors, led to the dwindling scale of China’s forex reserves in April, Wang noted.
The Japanese yen declined 6.2 percent against the dollar last month, while the euro was down 4.7 percent.
Noting the rising external uncertainties and increasing fluctuations in the global financial market, Chinese officials and experts stressed that China’s forex reserves – the largest in the world – can maintain stability in the next stage, and the country has the foundation and conditions to adapt to the current round of US Fed policy adjustments.
“China’s coordination of epidemic prevention and control and economic and social development, combined with its strong economic resilience, sufficient potential and long- term positive fundamentals, are conducive to maintaining the overall stability of forex reserves,” Wang noted.
China continued to see cross- border capital net inflows in April, and the supply and demand of the domestic foreign exchange market remained balanced, according to Wang.