On October 22, the State Council Information Office held a press conference to introduce the foreign exchange income and expenditure data for the first three quarters of 2024. The data showed that in September 2024, banks settled $237.7 billion in foreign exchange, sold $189.5 billion, and had a surplus of $48.2 billion; banks acted on behalf of clients with foreign-related income of $630.6 billion and made payments of $570.4 billion, resulting in a surplus of $60.2 billion. In September, both bank settlement and sale of foreign exchange and bank acting on behalf of clients' foreign-related receipts and payments switched from a deficit to a surplus compared to the previous month.
Regarding the current foreign exchange situation, Li Hongyan, Deputy Director of the State Administration of Foreign Exchange, summarized that since the beginning of this year, the renminbi exchange rate has remained basically stable amidst two-way fluctuations. The expectations and transactions in the foreign exchange market have been rational and orderly, and the overall international balance of payments has been fundamentally balanced. The maturity and inherent resilience of China's foreign exchange market have been continuously strengthened, and the ability to withstand changes in the external environment has also been significantly enhanced, providing strong support for the overall stable foreign exchange income and expenditure situation this year.
According to Li Hongyan, in the first three quarters of 2024, China's foreign exchange income and expenditure situation showed characteristics such as the resumption of net inflow of cross-border funds, the trend towards a basic balance in settlement and sale, an orderly recovery of settlement rate and a stable decline in sale rate in recent times, rational willingness of enterprises to settle and sell, and the basic stability of the scale of foreign exchange reserves.
At the same time, since the beginning of this year, the comprehensive rate of return on renminbi bonds has been good, attracting foreign investors to increase their holdings of renminbi bonds. Li Hongyan said that as of now, the total amount of renminbi bonds held by foreign capital within the territory exceeds $640 billion, which is at a historical high. In addition, driven by the rise in domestic stock market, since late September, foreign capital's net purchase of domestic stocks has generally increased, and the willingness of foreign capital to allocate renminbi assets has been further strengthened.
"At present, foreign investors' investment in the domestic capital market is still in the initial stage, and the scale and proportion of holding renminbi assets are not high. The proportion of foreign capital in domestic stock and bond markets is about 3% to 4%. Supported by multiple favorable factors, there is still room for further improvement." Li Hongyan said that overall, foreign capital allocation of renminbi assets helps to enrich domestic market participants, improve market liquidity, and promote the domestic capital market to be more active and internationalized.
Jia Ning, Director of the Balance of Payments Department of the State Administration of Foreign Exchange, said that overall, China's international balance of payments has a solid internal economic foundation and good market conditions. Since the beginning of this year, the current account has developed steadily, the scale of two-way transactions has increased, and the surplus continues to be at a reasonable and balanced level. From the perspective of the capital account, foreign direct investment has recently improved, and foreign capital coming to China to buy bonds and stocks under the security investment has been generally positive.
"We are confident in expecting that in the next few months and for a longer period, China's cross-border capital flows will maintain a stable and positive trend," Jia Ning said.
Looking forward, Li Hongyan said that there is still uncertainty about the pace and path of future interest rate cuts by the Federal Reserve, and market expectations have been continuously adjusted in line with changes in U.S. economic data. Looking at the past, adjustments to the Federal Reserve's monetary policy will have spillover effects on the global financial market. Although China's foreign exchange market has been affected, it has generally remained stable, mainly due to the support of the domestic economic foundation.
"In the future, China's economy will maintain high-quality development, and high-level opening up will continue to advance, and market resilience will be further strengthened, providing a more solid foundation and conditions for the stable operation of the foreign exchange market." Li Hongyan said that the continuous consolidation of China's economic recovery and upward trend will help to consolidate the internal foundation for the stable operation of the domestic foreign exchange market. Since the beginning of this year, the economic operation has been generally stable. Recently, China has strengthened counter-cyclical macroeconomic regulation and introduced a package of incremental policies, which will continue to promote economic recovery and upward trend, boost market expectations and confidence, enhance China's economic vitality, promote the steady development of cross-border trade and investment, and provide a solid foundation for the stability of the foreign exchange market.