REPORT ON CHINA INTERBANK FOREX MARKET IN THE FIRST QUARTER OF 2002
Daily transaction volume dropped
moderately
There were totally 58 sessions of trade in the first quarter of 2002, which ended up with US$ 19.78 billion accumulatively, and an average daily volume of US$ 341 million. Daily turnover decreased by 11.31 per cent compared with last quarter and increased by 24.06 per cent when compared with the same period last year. For USD, HKD and JPY, daily transaction volume also decreased compared with last quarter; and the daily transaction volume of JPY decreased while that of the other two increased, when compared with the same period of last year.
USD went up, HKD fluctuated, and JPY declined first and then recovered
USD went up in the first quarter of 2002. From January to the Spring Festival in February, it carried on fluctuating between 8.2765 and 8.2768. After February 19, the Spring Festival holidays, USD broke through the ceiling of the case, leaped high and went up progressively. The weighted average price of USD leaped to 8.2775 from 8.2768 at the beginning of this quarter, and ended up with 8.2774 which was 8 bps higher than that of last quarter.
HKD fluctuated in a case-shaped way between 1.0610 and 1.0605. The weighted average price of HKD at the beginning of this quarter was 1.0605, and ended up with 1.0607, 2 bps higher than 1.0605 at the end of last quarter.
JPY declined first and then recovered. In the first two months JPY fell moderately but continuously, to the lowest weighted average of 6.1331. And then it revived in March and after reaching the highest of 6.4681 on March 8, it fell again. The weighted average rate of JPY ended up with 6.2250, 760 bps lower than 6.3010 at the end of last quarter.
The surplus of supply over demand stood still
Compared with the fourth quarter of 2001, daily supply and demand in forex market both increased a little. The surplus of this quarter shrank by US$ 1.23 billion compared with last quarter; the daily surplus decreased by 0.01 per cent but increased by 47.72 per cent compared with the fourth and first quarter of 2001, respectively.
Brief analysis
Economic growth slowed down and foreign trade kept in surplus
GDP in 2001 increased by 7.3 per cent, while it increased by 7.6 per cent in the first three quarters, meaning that the growing speed had slowed down, which reduced market expectation on economic growth. But foreign trade surplus of the first two months this year unexpectedly increased by 59.5 per cent compared with the same period of 2001.
Foreign investment flourished
The contracted foreign direct investment (FDI) in January and February 2002 reached US$11.45 billion, 24.41 per cent higher than that of the same period in 2001, and the utilized FDI increased by 47.97 per cent to US$5.87 billion.
Foreign exchange reserve remained abundant
By the end of February 2002, the official foreign exchange reserve reached US$223.5 billion, US$11.3 billion more than that of the end of last year, and gave a strong support to the constantly stable exchange rate of RMB.
JPY depreciation caused pressure on RMB
Since the beginning of 2002, the exchange rate of JPY against USD kept on falling successively, once dropping to 135 JPY against 1 USD, and resulting in devaluation expectancy of the exchange rates in Asian countries. Without exception, the external potentiality of China's economic growth was also influenced by the depreciation of JPY. But the interest rate cut in February 2002 alleviated the debt repayment pressure of domestic enterprises and promoted the domestic growth to a certain extent, which kept the RMB strong and beat the pressure of depreciation.
(by Wu Jingjing)