What are the reasons for the five consecutive increases in China's foreign exchange reserves? This is a question that everyone is concerned about. The fourth question of the people's daily about the five consecutive increases in foreign exchange reserves makes us understand that the key points are these, which have certain reference significance for our future investment.
Reasons for China's foreign exchange reserves rising for five consecutive years
According to the data recently released by the State Administration of foreign exchange, by the end of March 2019, the scale of China's foreign exchange reserves was 3098.8 billion US dollars, an increase of 8.6 billion US dollars or 0.3% over the end of February, which is the fifth consecutive month of increase in foreign exchange reserves.
From the historical data, we can see that the trend of China's foreign exchange reserves in the past year is a "V" trend, which makes many investors worry that things will turn negative if they are extreme. What are the reasons for the five consecutive increases in China's foreign exchange reserves and what problems should investors pay attention to in the investment process?
According to the people's daily four questions, the five consecutive rise of China's foreign exchange reserves is related to the exchange rate, the valuation of bonds held and capital inflows. Since November last year, the value of RMB assets has been highlighted, attracting foreign capital to continue to flow in. At the same time, the exchange rate of RMB against the US dollar has stabilized and risen, the US dollar index has fallen from a high level, and the value of non US dollar assets has risen.
At the same time, most of China's foreign exchange reserves are bonds. In March this year, the yields of U.S. bonds and European bonds declined. The decline in bond yields corresponds to the rise in bond valuations, thus driving the growth of foreign exchange reserves. Moreover, since the beginning of this year, the operation of China's foreign exchange market has become more stable, and the cross-border capital flow of main channels has further improved, providing a solid foundation for the stability of the scale of foreign exchange reserves.
Reasons for China's foreign exchange's five consecutive rises
In addition, since last year, the structure of China's balance of payments has begun to change, and the factors that traditionally constitute the source of foreign exchange reserves have declined. At the same time, the non direct investment under the capital account has rebounded significantly, and the investment funds of cross-border stock and bond securities have increased.
Therefore, China is pushing forward the reform, further broadening the channels for foreign capital to enter China's securities market, improving the trading convenience, and improving the level of supervision. At the same time, China has accumulated a large number of listed companies, the size of the bond market has leaped to the second place in the world, and the underlying foundation of RMB assets is rich, which can provide investors with more choices.
However, the returns of China's domestic stock and bond markets have a low correlation with the major global indexes. In addition, the international reserve currency status of RMB is expected to rise, so whether from the perspective of asset allocation or sharing decentralization, RMB assets are quite attractive. Therefore, investors should focus on the advantage of RMB in the process of investment.