SMM News: at 10:00 today (July 19), the Information Office of the State Council held a press conference at the Press briefing Room of the Information Office of the State Council. Wang Chunying, director of the Department of balance of payments and spokesman of the State Administration of Foreign Exchange, introduced the foreign exchange revenue and expenditure data for the first half of 2018 and answered a reporter's question.

This year, especially since the second quarter, the changes in the international financial market are still relatively great. We have seen the exchange rate of the US dollar change its previous downward trend, US dollar interest rates have also risen, some emerging economies have been hit relatively hard, global trade frictions have intensified, and market risk aversion has increased. The volatility of international capital markets has increased. As a result, the complexity, volatility and uncertainty of the external environment have increased significantly. However, in this context, the domestic economic operation in the first half of the year is still stable, in-depth opening to the outside world, the foreign exchange market has maintained a relatively stable pattern, the overall performance is still very prominent. We can make two comparisons and take a look at the situation of cross-border capital flows in China in the first half of this year.

First of all, from the vertical comparison, the operation of China's foreign exchange market in the first half of the year is more stable and balanced than in previous years. On the one hand, the bank settlement and sale of foreign exchange and cross-border foreign exchange income and expenditure showed a surplus, compared with the previous period is a relatively large deficit. In the first half of this year, the bank had a foreign exchange surplus of US $13.8 billion, compared with a deficit of US $105.4 billion, US $173.8 billion and US $93.8 billion, respectively, from 2015 to the first half of 2017. In the first half of the year, the bank had a foreign exchange surplus of US $20.4 billion on behalf of its clients, compared with a deficit of US $22.8 billion, US $25.9 billion and US $14.3 billion respectively from 2015 to the first half of 2017. From this point of view, both the settlement and sale of foreign exchange and cross-border foreign exchange receipts and payments are in surplus, which has changed a lot compared with previous years.

From the other side of vertical comparison, the two-way fluctuation of RMB exchange rate is enhanced, the market expectations are reasonably divided, and the trading behavior of the main body of the market is more diversified. In the first half of this year, the RMB exchange rate against the US dollar fluctuated in both directions, with banks closing and selling foreign exchange and cross-border income and expenditure slightly in turn in the first half of this year, rather than the previous one-way change. It reflects that the main body of the market determines and arranges its own cross-border income and expenditure and settlement of foreign exchange according to the actual demand.

From the horizontal comparison, China's foreign exchange market and RMB exchange rate are still relatively stable on a global scale. In the first half of this year, the dollar index rose 2.7 per cent overall, indicating that the currencies of the major developed economies fell 2.7 per cent against the dollar; The emerging market currency index EMCI fell 7.3 per cent, while the renminbi's midpoint against the dollar fell 1.2 per cent and the nominal effective exchange rate (CFETS) rose 0.9 per cent. During the turmoil in emerging markets, China has effectively responded to external shocks because of sound economic fundamentals, a good balance of payments, a level of foreign debt within a safe line, and relatively abundant foreign exchange reserves. China's cross-border financial flows have not been greatly affected.

Therefore, whether vertical or horizontal comparison, in the first half of the year, with the rise of external environmental fluctuations, China's cross-border capital flows are generally stable, the supply and demand of the foreign exchange market is basically balanced, and the two-way fluctuation of the RMB exchange rate is enhanced.