EXCESS OF FOREX SUPPLY OVER DEMAND EXPANDED

Transaction summary

Average daily turnover increased

There were a total of 22 trade sessions in August 2002, ending up with an accumulative turnover of 9.79 billion in US dollar terms. The average daily turnover was US$ 445 million, hitting record high, up 22.28 per cent over July and 51.65 per cent compared with the same period in 2001.

Compared with July, the average daily turnover of USD and EUR increased while the turnover of HKD and JPY decreased. Compared with the same period in 2001, the average daily turnover of USD and EUR was up remarkably, while that of JPY decreased to some extent.

USD fluctuated significantly, HKD crested and dropped, JPY rose gradually and EUR experienced a staggered rise

USD fluctuated significantly in August. It touched its peak and then fell in the first ten days, rallied in the second ten days, and recovered after dropping during the previous ten days. The lowest and highest weighted average prices of the USD were 8.2766 and 8.2769 respectively. The weighted average price closed at 8.2768 in August, one bps higher than that of end-July.

HKD soared several times this month but failed to remain at its peak. The weighted average price of HKD on the first day was 1.0607, the lowest price of this month. The highest price of this month was 1.0609. At the end of this month, the weighted averaged price was 1.0607, one bps lower than that of end-July.

JPY rose gradually in August. In the first ten days, the weighted average price of JPY rocketed to 6.9135, and then dropped to 6.8335, the lowest of this month. In the second ten days, it climbed again to 7.0339, the highest of this month. At the end of this month, the weighted average price was 7.0067, 1046 bps higher than that of end-July.

EUR experienced a staggered rise, including one day with no transactions. EUR remained depressed at the beginning, fluctuated and then recovered at the end of August. The highest and lowest weighted average prices of EUR in August were 8.1675 and 7.9968 respectively. The weighted average price of EUR at the end of this month was 8.1523, 123 bps higher than that of end-July.

The excess of forex supply over demand continued to expand

Compared with July, average daily supply on the interbank forex market increased while the demand decreased in August, resulting an excess increase of US$ 1.76 billion over July's figure. The average daily surplus increased by 32 per cent over July and 67 per cent over the same period last year.

Summary of broking service of forex deposits

In August, fourteen domestic and foreign banks and non-bank financial institutions were involved in the broking service of forex deposits with an accumulative turnover of US$ 55 million, HK$ 170 million and 6 million. The most frequent trading maturity was one week, and the funding rates were a bit lower than those on international markets.

Brief analysis

July saw a satisfactory performance of China's economy, which was a good beginning of the second half-year. This encouraged the interbank forex market to be active with a larger turnover.

China's economy grew rapidly

The industrial value-added increased by 12.8 per cent in July, 0.4 per cent higher than June. The steady growth of industry created a sound environment for other sectors.

Import and Export kept active with surplus in foreign trade

The grand total of exports and imports in July was US$ 56.2 billion with a record-high export volume of US$ 29.21 billion, up 28.1 per cent over the same period in 2001. August's trade surplus of was US$ 2.22 billion.

Foreign investment grew vigorously

The contracted FDI in July 2002 reached US$ 10.36 billion, and the utilized FDI reached US$ 4.96 billion, 41.78 per cent higher than the same period in 2001. (by Wu Jingjing)