In May, China's foreign exchange market maintained a basic balance between supply and demand.

　　According to the State Administration of Foreign Exchange on June 15th, the data for bank foreign exchange transactions and bank-related cross-border payments for May 2023 have been released. Wang Chunying, Deputy Director of the State Administration of Foreign Exchange and spokesperson, answered questions from reporters about the foreign exchange situation in May 2023.

　　Question: What are the characteristics of China's foreign exchange situation in May 2023?

　　Answer: China's foreign exchange market maintained a basic balance between supply and demand. In May, non-bank sectors such as bank foreign exchange transactions, enterprises, and individuals all showed a surplus in cross-border receipts and payments, with a scale of USD 3.3 billion and USD 1.9 billion, respectively. Considering other supply and demand factors, the domestic and foreign exchange markets maintained a basic balance between supply and demand.

　　Market expectations remained stable, and foreign exchange transactions were rational and orderly. In May, the settlement rate (the ratio of customers selling foreign exchange to banks to customers' foreign exchange income) was 72%, which was basically stable compared to the previous period. The willingness of market entities to sell foreign exchange continued to remain at a high level for nearly a year, showing a rational trading model of "selling foreign exchange at high prices". The sales rate (the ratio of customers buying foreign exchange from banks to customers' foreign exchange expenditures) was 70.4%, a decrease of 0.7 percentage points from the previous period, and the willingness of market entities to buy foreign exchange remained stable.

　　The overall stability of the main channels for cross-border capital flows. Under the current account, the surplus of foreign trade in goods in May increased by 23% month-on-month, continuing to play a stabilizing role in the basic cross-border capital flow, while the deficit in cross-border receipts and payments for service trade increased slightly due to the slow recovery of cross-border travel by residents. Under the capital account, foreign investment in China's capital remained a net inflow, and foreign investment in the domestic bond market continued to improve. Domestic entities' direct investment abroad and securities investment abroad remained stable and orderly.

　　In the future, with the coordinated efforts of macro policies, China's economic operation will continue to improve, and its support for the foreign exchange market will be further enhanced. The tightening cycle of monetary policies in major developed economies is coming to an end, and the sustained strength of the US dollar is difficult to maintain, and the relevant spillover effects will gradually weaken. At the same time, China's foreign exchange market has shown new features of increased resilience, and its ability to adapt to changes in the external environment has significantly improved. China's cross-border capital flows are expected to continue to remain stable and orderly.