China’s Foreign Exchange Market Shows Stability and Improvement in February 2024
On March 15, the State Administration of Foreign Exchange released data on bank foreign exchange settlement and sales, as well as bank foreign-related receipts and payments on behalf of customers for February 2024. The data revealed that China’s foreign exchange market operated steadily in February, with cross-border capital flows becoming more stable.
According to the data, banks settled US$154 billion in foreign exchange and sold US$152.3 billion in February. Banks’ foreign-related income on behalf of customers reached US$456.1 billion, while external payments amounted to US$444 billion. From January to February 2024, banks had a cumulative foreign exchange settlement of US$358.2 billion and cumulative sales of US$366.4 billion.
Wang Chunying, the State Administration of Foreign Exchange’s deputy director and spokesperson, noted that in February, there was a surplus of US$12.1 billion in cross-border receipts and payments by enterprises, individuals, and non-bank sectors, reflecting a stable market. Additionally, the average daily net inflow of cross-border capital under trade in goods increased by 3% year-on-year.
Experts also weighed in on the positive outlook for China’s foreign exchange market. Zhao Qingming, deputy director of the China Banking Management Research Institute, stated that international financial institutions are optimistic about the future returns of RMB bond assets, indicating a growing interest in RMB assets allocation.
Looking ahead, Wang Chunying emphasized that China’s foreign exchange market is expected to continue operating smoothly, supported by economic fundamentals and favorable policy and market conditions. With the deepening development of the market and improved enterprise exchange rate risk management, the participants in the foreign exchange market have become more mature and rational in their transactions.
Overall, experts believe that as macroeconomic policies continue to support the economy’s rebound and high-level institutional opening-up attracts international capital, China’s foreign exchange market will remain stable and balanced. The increasing flexibility of the RMB exchange rate and heightened awareness of exchange rate risk neutrality will help mitigate external shocks and ensure the market’s smooth operation.