188比分直播

图片
ChineseEnglish
SAFE News
  • Index number:
    000014453-2020-0056
  • Dispatch date:
    2020-03-22
  • Publish organization:
    State Administration of Foreign Exchange
  • Exchange Reference number:
  • Name:
    Respond to the Pandemic and Ensure Financial Market Stability —— Press Conference Transcript
Respond to the Pandemic and Ensure Financial Market Stability —— Press Conference Transcript
Firstly, the rise in the US Dollar Index is the result of strained US dollar liquidity in global markets. It is a technical rise that is not driven by economic fundamentals. Along with the rapid spread of the virus across the globe, risk aversion in the market has increased and global markets have become more volatile, leaving market players eager to get returns, thus stretching the US dollar liquidity and technically driving up the US Dollar Index. As we all know, the US dollar takes a large share in global economic and financial activities in terms of pricing, settlements or transactions, and this is why the US Dollar Index has risen rapidly these days.

Secondly, the RMB exchange rate remains relatively robust in global markets, which Mr. Deputy Governor has given a detailed explanation just now. In response to the quick rise in the US Dollar Index, other currencies have generally depreciated against the US dollar. From March 10 to 19, the euro and the GBP declined by 6.6% and 12.5% respectively against the US dollar, and the Emerging Market Currency Index went down by 3%, while the RMB exchange rate was devalued by a slight 2%. This shows that the RMB exchange rate against the US dollar has been passively brought down by the strengthening dollar, but at a margin lower than those of major global currencies such as the euro and the GBP, as well as emerging market currencies. Further, a basket of currencies show that the RMB exchange rate has risen by 2.7%.

Thirdly, the supply and demand in China's foreign exchange market is in balance. In February, China posted a surplus of USD 14.2 billion in banks' settlements and sales of foreign exchange and a surplus of USD 9.6 billion in foreign-related receipts and payments in non-banking sectors. With other supply and demand factors considered, such as forward sales and settlements of foreign exchange and options, the supply and demand in China's foreign exchange market have found a basic equilibrium. Market players including firms and individuals, as we have found, settle foreign exchange when the exchange rate is high and purchase foreign exchange when the exchange rate is low. This is a reasonable trading model, which shows the exchange rate, a price factor, has played a positive role in regulating the supply and demand in the market. Since March, the supply and demand in China's foreign exchange market have remained in balance.

The strained US dollar liquidity and the rising US Dollar Index will inevitably impact emerging market economies including China in the short run. So we need to tighten monitoring and respond proactively and properly. In the medium and long run, China's economic fundamentals, its currency and financial situations will strongly underpin the stability of China's cross-border capital flows and the RMB exchange rate will fluctuate in two ways within a reasonable range, with no ground for significant devaluation.

For this, Mr. Deputy Governor has given many reasons and I want to stress them once again. First, as the epidemic prevention and control are yielding positive changes, the work resumption rate is rising, trade is recovering, and macroeconomic policy support is being stepped up, which have provided a strong boost to the growth of the real economy.

Second, major economies' monetary policy rates have fallen in the zero or negative territory, while China's monetary policy rate remains in the normal territory, leading to high spreads between China and the rest of the world and increasing the RMB's value and attractiveness for global asset allocation. Here is a figure that can confirm this. The Fed has cut interest rates twice recently, resulting in expanded spreads between the US and China. From February 20 to March 19, the spread in 10-year treasury bond between China and the US reached a daily average of 1.72%, up by 40 basis points from January. Therefore, the level of spread can help maintain the attractiveness and value of RMB assets for asset allocation.

Third, as the RMB exchange rate formation mechanism is improved, exchange rates have been more elastic and the regulation capabilities of the foreign exchange market and its maturity have been on the rise, enabling China to better guard against and respond to risks arising from cross-border capital flows.

Therefore, we are confident that, as epidemic prevention and control and resumption of work progress under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, China's economy will remain sound in the long term and the goal of forestalling and defusing major financial risks will surely be achieved as scheduled. Thank you.

Hu Kaihong: This is the end of today's press conference. Thank you, speakers. Thank you, friends from the press.

(The original text is available at www.pbc.gov.cn)



The English translation may only be used as a reference. In case a different interpretation of the translated information contained in this website arises, the original Chinese shall prevail.

Contact Us | For Home | Join Collection

State Administration of Foreign Exchange