The foreign exchange market is more resilient and mature
[Report from the press conference of the State Council Information Office]
The sudden new crown pneumonia epidemic in 2020 has caused a severe impact on the world economy and increased volatility in the international financial market.
The highest and lowest fluctuation range of the US dollar index is 15%, and the external environment is extremely complicated.
At the press conference of the State Council Information Office held on January 22, Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, gave a detailed explanation of the 2020 foreign exchange receipts and payments data.
Wang Chunying pointed out that in 2020, China's cross-border capital flow and the operation of the foreign exchange market have withstood severe tests, showing the overall characteristics of "increased resilience and maturity", which are prominent in the following aspects.
The international balance of payments is independently balanced, and foreign exchange reserves are basically stable.
In the first three quarters of 2020, the ratio of my country's current account surplus to GDP is 1.6%, which is equivalent to the average level in recent years and remains within a reasonable equilibrium range.
The non-reserve nature of financial account funds have been in and out, and the overall deficit has been maintained, which has played a role in balancing the current account surplus.
With an overall balance of international payments, China's foreign exchange reserves maintained a scale of US$3.2 trillion at the end of last year.
"It can be said that my country's international balance of payments has gradually moved towards an autonomous balance in recent years." Wang Chunying said.
The RMB exchange rate fluctuated in both directions and remained basically stable overall.
Since 2020, with changes in the domestic and foreign macroeconomic environment and market sentiment, the renminbi exchange rate has increased volatility and appreciated at the beginning of the year; with the outbreak of the epidemic, its value has depreciated, and the lowest has fallen below 7.1; however, as my country's epidemic prevention and control and work resumed After the production began to improve, the value rose, and the highest rose above 6.52.
Looking at the situation for the whole year, the average central parity of the RMB against the US dollar is 6.8974, basically the same as the 2019 average.
From the perspective of exchange rate flexibility, the one-year historical volatility of the RMB against the US dollar in 2020 is 4.2%, which is basically stable compared with other major currencies.
Foreign exchange transactions are rational and orderly, and market participants' expectations are basically stable.
"There is both a demand for buying foreign exchange and a demand for selling foreign exchange in the market. Market entities have maintained a rational trading model of'settlement of foreign exchange on highs and purchase of foreign exchange on lows'. We can see the maturity of my country's foreign exchange market. Significantly improved, market expectations have become more rational, and the foreign exchange market has effectively met market demand.” Wang Chunying believes that, in general, a more resilient and mature foreign exchange market has gradually formed, and the foreign exchange market will be further consolidated and exhibited an overall balance. Characteristics of two-way fluctuations.
Since the second half of 2020, the RMB has rebounded against the US dollar.
"The periodic appreciation of the RMB exchange rate has had an impact on the balance of payments within the normal range. It has not changed the pattern of my country’s current account maintaining a reasonable surplus, nor has it changed my country’s cross-border capital flows with both inflows and outflows, and overall balance. Capital flows are still maintained within a reasonable equilibrium range.” Wang Chunying believes that the future exchange rate will better play the role of an “automatic stabilizer” in adjusting international payments, and the basis for the overall balance of international payments will not easily change.
Wang Chunying said that in 2021, the SAFE will continue to promote the two-way opening of capital accounts, expand the pilot program for facilitation of foreign exchange receipts and payments in trade, support regional open innovation and the construction of special regions, build an open and diversified foreign exchange market with sound functions, and continue to deepen reform and opening up in the foreign exchange sector. To stimulate new development vitality.