General

As the Federal Reserve started the process of reducing its debt purchase plan, more and more emerging market economies began to respond. The latest news shows that the Central Bank of Russia raised the key interest rate by 100 basis points to 6.5%.

Talking about the impact of future Fed policy adjustments on my country, Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, stated at a press conference of the State Council Information Office on July 23 that China has obvious advantages in responding to external changes, and future Fed policy adjustments will affect China. The impact of cross-border capital flows is generally controllable.

Higher investment value of RMB assets

Wang Chunying pointed out that China has obvious advantages in dealing with external changes.

Specifically, at the level of the real economy, China's economic recovery has a relatively obvious lead, and the epidemic prevention and control situation is generally stable. In some macro indicators, there are many supporting factors, showing that China's economic fundamentals are stable and the foundation for resisting external shocks is solid.

At the financial market level, Wang Chunying introduced that RMB assets are more cost-effective, and global asset allocation needs are higher than emerging economies. At present, the price-to-earnings ratio of Chinese stocks is relatively low compared with developed markets and most emerging market stocks, so the investment value is high. Bonds also have good investment returns. For example, the 10-year Treasury bond yield has stabilized at around 3%, which is significantly higher than the bonds of countries that implement zero or even negative interest rates. At present, the proportion of RMB assets in global asset allocation is relatively higher than that of other emerging economies.

Wang Chunying also said that we must also see that the US fiscal deficit and financial market valuation are at historical highs. The market believes that this will restrict the speed and pace of the Fed's monetary policy adjustment. The future adjustment of the Fed's monetary policy may be gradual. The foreign exchange bureau is very concerned about the risks that the Fed's monetary policy adjustment may bring, and will be prepared for it.

Forex trading is rational and orderly

Wang Chunying said that since the beginning of this year, the foreign exchange market has been operating generally steadily, market sentiment has been basically stable, exchange rate expectations have been reasonably differentiated, foreign exchange transactions have been rational and orderly, and the foreign exchange market has maintained good order. The most prominent feature is reflected in the RMB exchange rate. The two-way volatility of the RMB exchange rate has increased and it has remained basically stable at a reasonable and balanced level.

"This situation will continue in the second half of the year." Wang Chunying said that the supporting factors that can make the foreign exchange market and the RMB exchange rate show the above characteristics and trends still exist, and the Chinese economy is stable for a long time. In addition, the continuous progress of reform and opening up, and the steady development of the international balance of payments, these factors have provided good support for the stable development of the foreign exchange market. The exchange rate will be affected by many factors at home and abroad, and some international uncertainties and unstable factors still exist. Therefore, there will be two-way fluctuations in the RMB exchange rate, but it will remain basically stable within a reasonable range.

Regarding the management of exchange rate risks, Wang Chunying introduced: First, we will continue to promote the deepening and opening up of the foreign exchange market, and increase the breadth and depth of the foreign exchange market, including researching and increasing new hedging products with market demand, and supporting companies to manage the exchange rate. The second is to improve the transparency of the foreign exchange market, increase the release and interpretation of data, and help companies gain in-depth understanding of policies and understanding, judge changes in the situation, and do a good job in risk management. The third is to continue to guide and support banks to further improve the level of foreign exchange business and better serve enterprises to manage risks. The fourth is to continue to strengthen cooperation with relevant ministries and commissions, and explore policies that can better support enterprises, especially small and medium-sized enterprises in exchange rate risk management.

Promote high-level opening of capital projects in a steady and orderly manner

In terms of financial opening, Wang Chunying said that the foreign exchange bureau will continue to deepen the reform and opening up of the foreign exchange sector with the focus on the two-way opening of the financial market in accordance with the decisions and deployment of the Party Central Committee and the State Council.

Wang Chunying introduced that, first, to promote the high-level opening of capital projects in a steady and orderly manner, improve the management of domestic stocks and bonds issued by overseas institutions, support private equity investment funds to carry out cross-border industrial and industrial investment, and expand the pilot program of qualified domestic limited partners and qualified overseas limited partners. Partner pilot. At the same time, the reform of foreign debt registration management will be promoted to facilitate cross-border financing of innovative enterprises; and the pilot project of integrated domestic and foreign currency fund pools for multinational companies will be launched. The second is to expand the scope of the pilot program for facilitation of trade balances. The third is to build an open and diversified foreign exchange market with sound functions, support financial institutions to launch more foreign exchange derivatives that meet market demand, further enrich foreign exchange market products and domestic and overseas participants, and continuously improve the foreign exchange market infrastructure system. The fourth is to support regional opening up and innovation and the construction of special regions, and study and launch high-level cross-border trade and investment pilot projects for opening up to the outside world.

The trend of foreign currency deposits will stabilize

Talking about the phenomenon that my country’s banks’ foreign currency deposits broke through the trillion U.S. dollar mark in the second quarter, Wang Chunying said that the recent increase in foreign currency deposits was contributed by both overseas and domestic entities. From the perspective of overseas deposits, it is mainly the overseas listing of overseas Chinese-funded enterprises and the deposit of funds raised after the issuance of bonds, which has little impact on the net flow of cross-border funds and the supply and demand of foreign exchange.

Wang Chunying said that the recent increase in domestic foreign currency deposits also reflects that corporate expectations are very rational. In recent years, market entities such as enterprises have more stable exchange rate expectations, foreign exchange transactions have become more mature, and the manipulation of domestic and foreign currency funds has become more rational, and there has been no particularly strong unilateral appreciation and devaluation expectations. In the case of the two-way floating of the RMB exchange rate, there has not been a situation in which companies are eager to sell the foreign exchange in the RMB appreciation stage, which clearly reflects the rationality of corporate expectations.

Wang Chunying emphasized that the trend of foreign currency deposits will stabilize in the future. Activities such as production and life at home and abroad are returning to normal, and the operation of goods trade will be more stable. At the same time, the external financial market conditions will also undergo some changes. Judging from the situation in May and June, the growth rate of foreign currency deposits has gradually slowed down. The foreign exchange bureau will continue to promote the two-way opening of the financial market to facilitate domestic entities to make better use of the domestic and international markets and resources, and to better serve the real economy through policy support and adjustments.