MONTHLY TURNOVER EXCEEDED US$10 BILLION, EXCESS OF FOREX
SUPPLY OVER DEMAND INCREASED
There were in total 21 trade sessions in November, ending with an accumulative turnover of US$11.13 billion. The total turnover from January to November reached US$85.12 billion, which was US$10.09 billion more than the total of 2001. The average daily turnover of this month set a new record of US$530 million, up 9.27% over October and 35.29% year-on-year. Compared with last month, the average daily turnover increased for USD but decreased for other trading currencies. The average daily volume of all these currencies increased as compared with the same period of 2001.
USD went up in fluctuation this month. At the first trading day, the daily weighted average price of USD was 8.2771. Then it went up from 8.2770, the lowest weighted average of this month. In the middle of the month, the daily weighted average price of USD rose to its high of 8.2773, but dropped two days later. At the end of this month, the weighted average price of USD rallied to 8.2772, one bp higher than that of last month.
With a high opening price, HKD remained stable except for a sharp drop during one day. At the beginning of this month, the weighted average price for HKD was 1.0611, the highest of the month, and then it dropped. Because the US market closed on November 11, trading was sluggish on November 8 and the weighted average price dropped to 1.0603, the lowest of the month. After November 11, the daily weighted average price wandered between 1.0608-1.0609 before it recovered slightly to 1.0609 at the end of the month, three bps lower than the October ending price of 1.0612.
JPY soared up before dropping. At the beginning of this month, the daily weighted average price was 6.7392, the lowest of this month. After reaching its peak of 6.9073 on November 12, it declined. Before it fell near to its lowest point, it increased slightly on November 22. At the end of this month, JPY recovered to 6.7661, 320 bps higher than its price of 6.7341 at the end of October.
Euro topped out this month with one no-trading day. At the beginning of this month, the weighted average price of EUR reached its lowest point of the month, 8.1920. After climbing up to its highest point of 8.3774 on November 11, it went down again. The weighted average price of the last trading day this month was 8.2208, 488 bps higher than its price of 8.1720 of last month.
The excess of forex supply over demand expanded. Compared with October, in November, the average daily supply in the forex market increased while demand decreased, leading to an excess increase of US$1.89 billion over last month. The daily surplus increased by 12.93% and 61.16% over October and last November respectively.
In November, the turnover of interbank forex deposit decreased as compared with October. Eleven financial institutions were involved in the interbank forex deposit with an accumulative turnover of US$87 million, and the only currency traded was USD. Most of the trading concentrated on maturities of up to one month. The three overnight deals were transacted at an average funding rate of 1.43%, a bit lower than the international level.
Brief analysis
In October, the economy maintained good momentum and foreign trade remained in surplus. Although the international economic growth had slowed down, the growing domestic economy driven by domestic demands had attracted a large inflow of foreign capital, thus activating the forex market to some extent.
Statistics showed that the economic growth rate in October was 14.2%, the highest since 1998. The industrial added value accumulated to RMB 2.5317 trillion yuan from January to October, up 12.3% over the same period of 2001.
Foreign trade remained in surplus, which resulted in the steadily increasing forex reserve. The grand total value of exports and imports from January to October was US$500.3 billion, up 19.7% over the same period of 2001 and only about US$10 billion less than that of the entire 2001. The trade surplus of the first ten months was US$24.74 billion. In October, monthly import and export both increased by more than 30% and the grand total of exports and imports rose by 32.3% year-on-year to US$55.15 billion. By the end of October, China's forex reserve had reached US$265.5 billion, US$53.3 billion more than that at the beginning of 2002.
The capital adequacy requirements on banks activated the market. With the year-end around the corner, some banks traded actively in the market in order to meet the capital adequacy requirements and cover position exposures. Therefore, the turnover of November hit a record high.
The RMB/USD exchange rate remained stable in spite of the FED's move to lower the interest rate by 50 bps on November 6.
(by Wu Jingjing)