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reporter of china business network: zhang shoulin editor of china business network: zhang yiming

on september 7, the state administration of foreign exchange released the latest monthly foreign exchange reserve data. as of the end of august 2024, my country's foreign exchange reserves were us$3,288.2 billion, an increase of us$31.8 billion from the end of july, an increase of 0.98%. at the end of july, the foreign exchange reserve data was us$3,256.4 billion.

a relevant person in charge of the state administration of foreign exchange said that in august 2024, the us dollar index fell and global financial asset prices generally rose due to factors such as macroeconomic data and monetary policy expectations of major economies. due to the combined effects of factors such as exchange rate conversion and asset price changes, the scale of foreign exchange reserves increased that month. my country's stable economic operation and long-term positive development trend will not change, providing support for the continued basic stability of the scale of foreign exchange reserves.

boc securitiesglobal chief economist guan tao pointed out that my country's foreign exchange reserves continued to increase significantly in august, mainly reflecting the positive valuation effects of factors such as the decline in the us dollar index, the overall rise in global financial asset prices, exchange rate conversion and asset price changes against the backdrop of rising expectations of the federal reserve's interest rate cuts.

the us dollar index fell more than 2% in august

the reporter noticed that in august, the us dollar index fluctuated downward from 104.0583 at the beginning of the month to 101.7320 at the end of the month, a drop of 2.24%. from the perspective of us bonds, in august, the yield of us 10-year treasury bonds fell overall, from 4.0900% at the end of july to 3.9100% at the end of august, a drop of 1.8bps. the weakening of the us dollar and the strengthening of us dollar assets are closely related to the expectations of the federal reserve's interest rate cuts that have continued to heat up in recent months.

in particular, the minutes of the federal open market committee meeting released by the federal reserve on august 21, us time, showed that the federal open market committee and the board of governors of the federal reserve system held a joint meeting from july 30 to july 31. participants believed that the latest data strengthened their confidence that inflation was moving toward the committee's goal. the vast majority believed that if the data continued to develop as expected, it might be appropriate to ease policy at the next meeting. the signals released by the meeting further strengthened the expectation that the federal reserve will announce a rate cut at the next meeting.

in a recent interview with the reporter, some domestic economists stated more clearly that the federal reserve’s interest rate cut trend is becoming clearer and is likely to occur in mid-september, with the only question being whether the reduction will be 25bps or 50bps.

guan tao said that in terms of currency, the u.s. dollar exchange rate index (dxy) fell for two consecutive months, down 2.3% to 101.7, and non-u.s. dollar currencies appreciated overall; in terms of assets, the 10-year u.s. treasury yield fell for four consecutive months, the dollar-denominated hedged global bond index rose 1.1% for the month, and the s&p 500 stock index rose 2.3%.

he further pointed out that the fed's interest rate cut in september is basically a foregone conclusion, but it cannot be ruled out that market expectations will continue to switch between soft landing, hard landing and no landing of the us economy. the data-driven pace and intensity of the fed's interest rate policy are still uncertain, and fluctuations in the international financial market are inevitable, which will continue to disturb the scale of my country's foreign exchange reserves. however, as the domestic economy continues to recover, the pressure of unilateral adjustment of the rmb exchange rate is relieved, and the supply and demand of foreign exchange in china improves, which will help my country's foreign exchange reserves remain basically stable.

the rmb exchange rate against the us dollar rebounded strongly in august

corresponding to the decline in the us dollar index, the rmb exchange rate has recently turned upward, recovering a large part of its previous losses. in late july, the rmb exchange rate against the us dollar was still above 7.277, and has continued to appreciate since then. it is now below 7.115, with an appreciation of more than 1,600 basis points. looking at the changes in august alone, the rmb exchange rate against the us dollar appreciated by more than 1,200 basis points.

regarding the recent exchange rate trend, tang yao, deputy director of the center for management science at peking university and doctoral supervisor, pointed out in an interview with the daily economic news that the us dollar is facing expectations of interest rate cuts in the short term, but my country is also facing certain expectations of reserve requirement ratio cuts and interest rate cuts. at present, it is judged that the rmb exchange rate against the us dollar will fluctuate roughly in the range of 7.0 to 7.2 in the short term.

in the medium and long term, tang yao told reporters that a clear judgment on the continued appreciation of the rmb needs to be based on the fact that the chinese economy exceeds market expectations. in the next three years, the fluctuation range of the rmb can be wider, possibly maintaining at 6.7~7.3.

bai ming, a member of the academic degree committee and a researcher at the ministry of commerce research institute, pointed out in an interview with the daily economic news that the rmb had depreciated excessively in the previous period. with the increasing expectation of the fed's interest rate cut, the rmb has shifted from its previous weak state to a neutral state. however, whether the rmb exchange rate against the us dollar will appreciate significantly in the short term is unlikely, but will return to neutral. at present, it is expected to fluctuate slightly around 7 this year, and there will not be major changes.

bai ming further pointed out that excessive appreciation will also put pressure on domestic exports, and of course, excessive depreciation will also cause capital outflow. in this regard, the rmb exchange rate is likely to fluctuate in both directions under the premise of stability and neutrality.

ji tianhe, a senior exchange rate expert at borne howard funds, told the reporter of the "daily economic news" that judging from the fluctuation range of the rmb exchange rate against the u.s. dollar, it was roughly between 7.0 and 7.2 from september to october, and the subsequent changes were closely related to the results of the u.s. election.

xia le, chief economist of banco bbva asia, told the daily economic news that the rmb exchange rate can be divided into three stages: short-term, that is, until the end of this year; medium-term, roughly within a year, that is, from september this year to september next year; and long-term, even up to five to ten years.

xia le said that it is better to judge in the long term, mainly depending on the performance of the chinese economy. he believes that in the next five to ten years, the room for rmb appreciation is very large. because the inflation level in europe and the united states has been high in the past period of time, the actual purchasing power of rmb is actually higher than theirs. so optimistically speaking, rmb may rise to 6 in the long term, or even break 6 and enter 5. of course, the time period needs to be extended to five to ten years.

in the short term, xia le said there are uncertainties. from now until the end of the year, the rmb exchange rate range is roughly between 7.0 and 7.3. at present, before the end of the year, the external factors affecting the rmb exchange rate are the fed's interest rate cut and the us election results.

however, xia le pointed out that from the perspective of regulatory policy adjustments, the exchange rate does not want to appreciate too quickly at present, so in the short term, 7.0 may be the upper limit and 7.3 may be the lower limit.

the central bank has stopped increasing its gold holdings for four consecutive months

china's central bank gold reserves remained unchanged for four consecutive months. data updated on the central bank's official website on september 7 showed that as of the end of august 2024, my country's central bank gold reserves were 72.8 million ounces, the same as last month.

in may this year, my country's central bank ended its 18-year consecutive increase in gold reserves, and the size of its gold reserves has since remained at 72.8 million ounces.

guan tao said that at the end of august, my country's total gold reserves were 72.8 million ounces, unchanged for the fourth consecutive month. however, due to the rise in international gold prices, the scale of gold reserves denominated in us dollars reached us$183 billion, equivalent to 5.6% of the scale of foreign exchange reserves in the same period, 2.2 percentage points higher than the end of october 2022 (the eve of the last round of continuous increase in gold reserves).

guan tao also pointed out that it is worth mentioning that in the past four months, the international gold price has risen from 2348 to 2513 us dollars per ounce, constantly breaking historical records. among them, the central bank's gold purchase is an important force.

according to statistics from the world gold council, in the second quarter of this year, global central banks purchased 183 tons of gold, a year-on-year increase of 5.6%, and the growth rate increased by 0.8 percentage points from the previous quarter. this shows that the current diversified allocation of reserve assets is not an individual behavior, but an international trend, and the multipolar evolution of the international monetary system will wear away the stone.

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