CCTV:

Since the beginning of this year, the external environment has become more challenging and complicated. How do you evaluate the performance of China's foreign exchange market in the first half of this year?

Wang Chunying:

Since the beginning of this year, although we have faced more complicated and severe external shocks and challenges, we can see the enhanced resilience of China's foreign exchange market. It is evident both from the price indicators related to the RMB exchange rate and the quantitative indicators such as the balance of payments and receipts and payments with foreign involvement. To be specific:

First, the RMB exchange rate has become more resilient and performed steadily worldwide. This year, affected by the interest rate hike of the U.S. Federal Reserve, the geopolitical conflict, and multiple other factors, the main change in the international foreign exchange market is the strengthening of the U.S. dollar and the weakening of major non-U.S.-dollar currencies. Against such a backdrop, the RMB exchange rate against the U.S. dollar has depreciated. However, compared with other major international currencies, the value of the RMB has been stable. Judging from the rise of the U.S. dollar index and the decline of other major currencies, the U.S. dollar index has increased by more than 11% since the beginning of this year. The depreciation of the euro, sterling, and yen against the U.S. dollar has been kept between 10% and 17%, and the depreciation of the RMB against the U.S. dollar has stood at 5.8%. From the multilateral exchange rate perspective, the RMB exchange rate index has seen an appreciation of 0.1%, indicating that the RMB is stable against a basket of currencies. Regarding exchange rate expectations, the relevant indicators of foreign exchange forwards and options have shown that there are no notable appreciation and depreciation expectations for the RMB exchange rate. In general, market entities have maintained a rational and orderly trading mode. Viewing the recent performance, although faced with a strong U.S. dollar, as the domestic economy has become stable and been recovering, the stability of the RMB exchange rate has become more prominent among the major global currencies. Since July, the multilateral exchange rate has risen steadily.

Second, China's cross-border capital flows are generally stable, demonstrating a relatively balanced development trend. At the beginning of this press conference, we introduced that in the first half of this year, there was a certain amount of surplus in the international receipts and payments via banks and in the foreign exchange settlement and sales by banks. Recently, short-term fluctuations and seasonal changes were seen in several channels. However, the basic equilibrium of cross-border capital flows was maintained, reflecting the robust performance of China's balance of payments structure.

Third, the current account surplus and long-term capital inflows are the fundamentals to stabilize China's cross-border capital flows. On the one hand, the current account maintains a reasonable surplus. In the first quarter of this year, the current account surplus reached $88.9 billion, the highest compared with the same period throughout history, and an increase of 25% over the same period last year. The ratio to GDP stood at 2.1%, which was within a reasonable range. In the second quarter, the trade surplus of goods was relatively high, and the deficit of cross-border travel and other service trade was low. It was estimated that the current account would continue the pattern with a reasonable surplus. On the other hand, direct investment under the capital account and medium- and long-term asset allocation funds are still playing a leading role. China's economy has maintained long-term growth, and China has been continuing to improve its market environment. Our efforts have helped attract capital inflows for direct investment and medium - and long-term asset allocation. From January to May this year, the utilized foreign investment was $87.8 billion, registering an increase of 23% year on year. Investment from overseas central banks and allocated funds tracking international indexes were stable in China's bond market, counterweighing the short-term fluctuations of cross-border capital.

Generally speaking, China has efficiently coordinated epidemic prevention and control with economic and social development. The strong resilience, ample potential, and vast room for maneuver of the Chinese economy have all laid a good foundation for the smooth operation of China's foreign exchange market and provided more support for China to cope with changes in the external environment. Thank you.