The State Administration of Foreign Exchange has released key data showing that the scale of foreign exchange reserves remains basically stable and has a solid foundation.

　　According to data released by the State Administration of Foreign Exchange on June 7, China's foreign exchange reserves stood at 3.1765 trillion by the end of May 2023, down by3.1765trillionbytheendofMay2023,downby28.3 billion or 0.88% from the end of April.

　　Industry experts say that in May, the global financial asset prices rose and fell due to factors such as expectations of major economies' fiscal and monetary policies and macroeconomic data. As a result, the US dollar index rose, and the size of foreign exchange reserves declined due to the combined effect of exchange rate conversion and asset price changes. Looking ahead, China's strong economic foundation and broad development prospects are conducive to maintaining the basic stability of foreign exchange reserves.

　　The decrease in reserves is temporary

　　Industry experts said that the main factors affecting the fluctuation of China's foreign exchange reserves are still exchange rate and asset price changes.

　　From the perspective of exchange rate factors, Wen Bin, chief economist of Minsheng Bank, said that in May, the US dollar index rose overall by 2.6% to 104.3, driven by factors such as better-than-expected US economic data and the gradual approach to reaching a debt ceiling agreement. Among non-US dollar currencies, the yen, euro, and pound depreciated against the US dollar by 2.2%, 3.0%, and 0.9%, respectively. Exchange rate factors caused a significant devaluation of the non-US dollar portion of foreign exchange reserves.

　　Regarding asset prices, Pang Ming, chief economist and research director of Cushman & Wakefield Greater China, believes that the performance of asset categories such as stocks and bonds in the global financial market has led to adjustments in the valuation of the asset composition in China's foreign exchange reserves. "It must be noted that the reduction in the size of foreign exchange reserves is only temporary rather than a trend," he said.

　　Industry experts also emphasized that after excluding exchange rate and asset price factors, it can be inferred that the change in foreign exchange reserves in May due to international balance of payments remained within a reasonable range. This indicates that China's foreign exchange market is operating smoothly overall, and the domestic and foreign exchange supply and demand are basically balanced.

　　Maintaining basic stability has a foundation

　　Looking ahead, the State Administration of Foreign Exchange said that China's economic operation continues to recover and improve, which is conducive to maintaining the basic stability of foreign exchange reserves.

　　"With the normalization of China's economic and social recovery, the momentum of economic development will further consolidate, and the effectiveness of macro policies, the vitality of business entities, the endogenous power of the economy, long-term sustainable development, and high-quality development capabilities will continue to strengthen." Pang Ming expects that the foreign exchange market will continue to operate steadily, and the attractiveness of RMB assets will further increase, which is conducive to and helpful for maintaining the overall stability of foreign exchange reserves.

　　According to Wen Bin, the current world economic growth is weak, and the inflation level of major developed economies is still high. The international financial market still faces many uncertain and unstable factors. However, China's economic operation continues to recover and improve, and the overall balance of international payments is conducive to maintaining the basic stability of foreign exchange reserves.