Yi Xianrong: Concern About The Total Foreign Exchange Reserves

In recent years, the total amount of China's foreign exchange reserves has always been the focus of attention at home and abroad.

Because it can not only reveal the information of the central bank's asset allocation, but also reveal the change and future trend of China's central bank's foreign exchange policy.

Therefore, the recent analysis of the Wall Street journal believes that the total amount of foreign exchange reserves announced by China's State Administration of foreign exchange may be far from the actual total.

The news immediately aroused widespread concern in the global market.

Because China's State Administration of foreign exchange reported that as of the end of October, the total foreign exchange reserves held by China amounted to US $3 trillion and 530 billion.

But taking into account the position of the US dollar short positions held by the people's Bank of China, the Wall Street journal believes that China's total foreign exchange reserves should be US $3 trillion and 100 billion.

In particular, from the results of some foreign media and research institutions, there is a big gap between China's total foreign exchange reserves and the government's announcement.

For instance, in August, the central bank's internal report showed that the central bank had to sell more dollars to support the RMB exchange rate because of the depreciation of the renminbi in the month of the new exchange reform of the Central Bank of China. The report shows that the Central Bank of China has sold foreign exchange reserves of 1200-1300 billion dollars.

But both the financial times and Reuters estimate that the Chinese central bank has sold foreign exchange reserves to $200 billion.

The data released by the Central Bank of China in August showed that China's foreign exchange reserves only decreased by 93 billion 900 million US dollars, a difference of about 100000000000 US dollars.

The difference between China's central bank and foreign media and foreign institutions in estimating the total amount of China's foreign exchange reserves is so great.

Some analysts believe that this is mainly because the Central Bank of China is using foreign exchange market tools to hedge against the decrease in China's total foreign exchange reserves.

For example, China's major banks have been borrowing dollars in the swap market and selling dollars on the spot market, and banks will also have long-term contracts with the Central Bank of China to hedge their US dollar risk.

If so, this means that the Central Bank of China is taking the positions of commercial banks in its balance sheet to maintain the stability of China's foreign exchange reserves.

For example, in August, the central bank and local lending institutions increased their domestic forward contract holdings to US $67 billion 900 million, which is 5 times the average monthly domestic forward contracts held from January to July.

Also, economists surveyed by Bloomberg expect China's September

It will drop by US $57 billion, but the data released by the Central Bank of China is a decrease of US $43 billion 300 million in foreign exchange reserves in September, a difference of 13 billion 500 million US dollars.

Also, in October, the Central Bank of China reported that China's foreign exchange reserves increased by US $11 billion 400 million.

This marks the 5 consecutive month of downward trend in China's foreign exchange reserves.

This also provides a solid support for the stability of the RMB exchange rate.

But the data surprised the industry.

Because there is still a gap of $41 billion 400 million, which can not be explained.

In response, many foreign media and research institutions have analyzed that this may be that China is using foreign exchange derivatives to ease the loss of its foreign exchange reserves.

Therefore, China's total foreign exchange reserves now amount to 3 trillion and 100 billion US dollars instead of US $3 trillion and 530 billion.

Foreign media have pointed out that no matter what kind of situation, RMB faces strong.

。

The Central Bank of China is now using foreign currency derivative positions to hide its moves to defend the renminbi. Eventually, the Central Bank of China will have to close these derivative positions.

Brazil used the same way to support rial in 2013, but it eventually led to a significant depreciation of Brazil's currency when the forward and exchange rate swap positions were liquidated.

In fact, this should be the most important warning for the Central Bank of China. Although such a thing may not happen on the RMB exchange rate, it is necessary for the Central Bank of China to make more preparations for it.

And the current Renminbi.

In fact, at which level or equilibrium is not determined by the real economy, it depends entirely on the balance of interests of the Central Bank of China.

Therefore, in the face of the United States will soon enter the interest rate cycle and the strength of the dollar, in the face of the full pformation of China's economy, and the impact and impact of RMB being included in the SDR, the Central Bank of China will never have to stick to the level of RMB exchange rate at which level it is necessary to stabilize in the short term. In the long run, it is necessary to balance the market and national interests.

This may be more beneficial to China's economy.

The issue of RMB exchange rate changes is also a balance of interests at home and abroad.

Even if China's exchange rate reform triggered by the August RMB exchange rate reform is expected, the total amount of foreign exchange reserves in China is also enough to deal with the possible crisis. Therefore, domestic and foreign markets can make an estimate of China's total foreign exchange reserves, but there is no need to overexplain this problem, nor is it the ability of the Central Bank of China to cope with the current overseas market's expectation of excessive depreciation of the RMB.

If the Central Bank of China is using the derivatives of the foreign exchange market to stabilize the total amount of China's foreign exchange reserves, the biggest purpose may actually be to face the expectations of the overseas market and overseas institutions over devaluing the RMB, or the foreign media's attitude towards the devaluation of the RMB is very sharp. How can the Chinese central bank reverse this expectation at a lower cost?

In fact, in recent months, any trend is the reason why the offshore market is short of the RMB exchange rate.

Therefore, in the view of the Central Bank of China, the stability of the total amount of China's foreign exchange reserves has become the mainstay to support the stability of the RMB exchange rate.

As recently pointed out by the Central Bank of China, the stability of the RMB exchange rate is still the most important work of the Central Bank of China, not only now, but also when RMB is included in the SDR.