On October 22, the State Administration of Foreign Exchange (SAFE) in China released data indicating that in September 2024, banks settled foreign exchange worth $237.7 billion while selling $189.5 billion. From January to September 2024, the total amount settled reached $1.6762 trillion, while the total amount sold was $1.7975 trillion, resulting in a settlement deficit of $121.3 billion.
During a press conference held by the State Council Information Office, Li Hongyan, deputy director of SAFE, highlighted five key trends in China’s foreign exchange revenue and expenditure for the first three quarters.
Firstly, there has been a recovery in net inflows of cross-border funds. The overall foreign exchange transactions handled by banks for clients showed a slight surplus, with the first quarter registering a small surplus, the second quarter shifting to a deficit, and the third quarter returning to a surplus. This trend is largely supported by a continued net inflow from goods trade, improving foreign direct investment into China, and orderly outbound investments from domestic entities.
Secondly, the settlement and sale of foreign exchange are trending towards a more balanced state. Li noted that for the first three quarters, there was an overall deficit in foreign exchange settlement mainly due to an expansion of the deficit in the second quarter. However, the third quarter saw a return to balance, with September showing a resumption of surplus, an increase in settlement, and stable sales figures.
Thirdly, the recent rates of foreign exchange settlement have shown an orderly increase, while sales rates have slightly decreased, indicating that enterprises are maintaining a rational approach to their foreign exchange activities.
Fourthly, the foreign exchange market has seen heightened activity. According to Li, the total trading volume in the domestic RMB foreign exchange market was $30.27 trillion for the first three quarters, reflecting a year-on-year growth of 10.1%. Among this, the spot and derivatives trading volumes were $10.18 trillion and $20.09 trillion, respectively, with derivatives accounting for 66.4% of the total trading volume, an increase of 3.7 percentage points compared to the same period in 2023.
Lastly, the scale of foreign exchange reserves has remained relatively stable. Li explained that although non-U.S. currencies have experienced fluctuations against the dollar this year and global asset prices have generally risen, factors such as exchange rate adjustments and changes in asset valuations have led to a gradual increase in China’s foreign exchange reserves. As of the end of September, the foreign exchange reserves stood at $3.3164 trillion, an increase of $78.4 billion since the end of 2023.
