In May, the scale of foreign reserves fell to 3.1765 trillion US dollars, experts said: exchange rate and asset price changes are the main factors

On June 7, the State Administration of Foreign Exchange announced data showing that as of the end of May 2023, the scale of our country's foreign exchange reserves was 3.1765 trillion US dollars, down 28.30 billion US dollars from the end of April, a decrease of 0.88%.

Image source: State Administration of Foreign Exchange website

The SAFE said that in May 2023, influenced by factors such as fiscal and monetary policy expectations of major economies and global macroeconomic data, the US dollar index rose, and global financial asset prices fluctuated. Under the combined effect of exchange rate conversion and asset price changes, the scale of foreign exchange reserves declined in that month. Our country's economic operation continued to pick up, which was conducive to the continued stability of foreign exchange reserves.

The Daily Economic News reporter noted that the scale of foreign reserves hit a new high of nearly 14 months at the end of April. Talking about the reasons for the decline in the scale of foreign reserves in May, Wen Bin, chief economist of Minsheng Bank (600016), said: "The main factors affecting the fluctuation of our country's foreign exchange reserves are still exchange rate factors and asset price changes."

From the perspective of exchange rate factors, Wen Bin believes that the dollar index in May was affected by factors such as better-than-expected US economic data and the gradual conclusion of debt ceiling negotiations. It rose 2.6% to 104.3 for the whole month; among non-dollar currencies, the yen, the euro, and the pound depreciated against the dollar to varying degrees. Exchange rate factors led to a large discount in the non-dollar part of foreign exchange reserves.

From the perspective of asset price factors, Wen Bin pointed out that the expectation of interest rate hikes in Europe and the United States has caused the bond market to decline as a whole. Among them, the yield of 10-year US bonds rose by 20 basis points to 3.64%, the yield of 10-year European bonds rose by 2 basis points to 2.46%, and the yield of 10-year Japanese bonds rose by 5 basis points to 0.45%. Global stock markets rose and fell. The S & P 500 stock index rose by 0.3%, the European Stoxx 50 price index fell by 3.0%, and the Nikkei 225 index rose by 7.0%. Asset price factors also led to a slight decrease in foreign exchange reserves.

At the same time, Wen Bin also pointed out: "After excluding the exchange rate and asset price factors, it can be estimated that the changes in foreign reserves caused by the balance of payments in May remained within a reasonable range, which shows that our countryforeign exchange marketThe operation is generally stable, and the domestic foreign exchange supply and demand remain basically balanced. "

Looking forward to the next stage, Wen Bin believes that the current world economic growth is weak, the inflation level of major developed economies is still high, and the international financial marekt is still facing many uncertain and unstable factors. However, our country's economic operation continues to pick up and the overall balance of payments is balanced, which is conducive to the continued stability of foreign exchange reserves.