Transaction summary
The average daily turnover increased. In August 2003, the accumulated turnover of the four traded currencies amounted to 11.36 billion in US dollar terms. The average daily turnover stood at US$541 million, up 3.5 per cent and 21.52 per cent over last month and the same period of last year. From January to August, the interbank forex market witnessed an accumulated trading volume of US$ 82.46 billion with an average daily turnover of US$497 million.
As compared with last month, the average daily turnover increased for USD, JPY and EUR, but decreased for HKD. Among the four currencies, the changes in USD and HKD were small. Compared with the same period last year, the average daily turnover for USD, HKD, JPY and EUR increased significantly.
The USD remained stable. Beginning the month at 8.2772, the weighted average price of USD reached a high of 8.2775 and hit bottom at 8.2766, closing the month at 8.2771, two bps lower than that of last month.
The HKD fluctuated. The weighted average price of HKD at the beginning of this month was 1.0609. During this month the weighted average price of HKD reached a high of 1.0612 and closed the month at 1.0608, the lowest weighted average price this month, one bp lower than that of last month.
The JPY climbed steadily. At the beginning of this month, the weighted average price of JPY was 6.8748, with levels breaking through 7.0000 and reaching 7.0046 on August 21. The monthly high of 7.0626 occurred at the end of this month, up 1707 bps over that of last month.
The EUR declined from its height, with weighted average prices of EUR opening the month at 9.2811. The EUR reached its highest level of 9.4439 and its lowest of 8.9756 within August, with values ending the month at 9.0075, 3767 bps lower than that of the previous month.
Compared with July, the average daily supply of the forex market increased while the average daily demand decreased in August. The excess forex supply over demand expanded by US$ 161 million over last month. The average daily surplus went up by 11.32 per cent and 23.29 per cent respectively over the previous month and the same period of last year.
In August 2003, ten financial institutions handled 11 interbank forex deposit deals with an accumulative turnover of US$ 100.83 million and HK$ 350 million. Deposit maturities were all within one month. The average funding rate of one-week USD was 1.188 per cent, higher than the international level. Quotes of medium and long-term forex deposit were actively made in the interbank market.
Brief analysis
The macro-economic performance was stable. In July 2003, the industry, investment and export remained their growth momentum. And the macro economy operates smoothly. The GDP is expected to grow by 7 per cent and may rise by 8 per cent this year. However, some economic indexes such as increase in investment, loans to real estate, and money supplies are showing signs of economic overheating. Relevant departments issued a series of adjustment policies and adopted precautionary measures so as to avoid big fluctuations in the economy.
The growth rate of export exceeded that of import, thus narrowing trade surplus. Since the fourth quarter 2002, import growth has been faster than export growth, thus leading to a downward trend for trade surplus. According to preliminary statistics from the Customs, the grand total of exports and imports from January to July of 2003 hit US$ 450.74 billion with a year-on-year increase of 37.9 per cent. The trade reached surplus of US$ 6.08 billion, a 61.1 per cent decline from a year earlier. During the first seven months of 2003, the volume of exports and imports were US$228.41 billion and US$222.33 billion, up 33.4 per cent and 42.9 per cent year-on-year respectively.
The inflow of foreign capital slowed down. Statistics from the Ministry of Commerce showed that from January to July 2003, new contracted FDI reached US$59.92 billion, up 32.53 per cent year-on-year. Utilized FDI hit US$ 34.25 billion, up 24.82 per cent over the same period of last year. As compared with July 2002, the contracted FDI this month was US$ 8.21 billion, up 4.8 per cent; and utilized FDI was US$ 3.1 billion, down 18.8 per cent.
There existed market expectations for RMB appreciation. Apart from frequent and long reports in the media, the expectation can be reflected in the change of two important indexes. One index is the so-called "hot money". The huge gap between BOP surplus and the increase in official forex reserves indicated the inflow of speculative capital; the other is the RMB non-deliverable forwards (NDF), which witnessed a rise of 1300 bps in the quoted price of one-year RMB NDF.
(by Zhang Shengju)