The central bank has shot for 15 consecutive months, which is relatively rare!
On February 7, data released by the State Administration of Foreign Exchange showed that as of the end of January 2024, the size of the People's Bank of China's ** reserves was reported at 72.19 million ounces, an increase of 320,000 ounces from the previous month. It is worth mentioning that this is the fifteenth consecutive month of increase, with a cumulative increase of 9.55 million ounces (about 271 tons). Based on the latest international spot ** (US$2,034 ounces), the cumulative increase in holdings reached US$19.4 billion (about RMB 140 billion).
Analysts pointed out that at present, the proportion of reserves in China's foreign exchange reserves is still low, and the total reserves of China and the total amount of foreign exchange reserves still do not match.
In terms of strong investment demand, the gold price has been the best, and the average gold price in 2023 will reach 1940$54 oz, an all-time high. Looking ahead, UBS's latest report** said that it will reach $2,200 an ounce in 2024, and there may be an "eye-catching" performance.
The central bank bought 140 billion yuan.
On February 7, data released by the State Administration of Foreign Exchange showed that as of the end of January 2024, China's foreign exchange reserves were US$3,219.3 billion, down US$18.7 billion from the end of December 2023.
According to the data, as of the end of January 2024, the scale of China's ** reserves was reported at 72.19 million ounces, an increase of 320,000 ounces from the previous month, and it has risen for the fifteenth consecutive month.
According to the State Administration of Foreign Exchange, in January 2024, affected by factors such as monetary policy expectations and macroeconomic data of major economies, the US dollar index and global financial assets were mixed. Factors such as exchange rate translation and changes in assets** combined to reduce the scale of foreign exchange reserves in the month. The basic trend of China's economic rebound and long-term improvement has not changed, which is conducive to maintaining the basic stability of the scale of foreign exchange reserves.
Wen Bin, chief economist of China Minsheng Bank, analyzed that in January 2024, the U.S. dollar index and global financial assets were mixed. On the currency side, the US dollar exchange rate index (DXY)**19% to 1033. The overall depreciation of non-US dollar currencies. In terms of assets, a hedged global bond index denominated in US dollars**02%；S&P 500 Index 16%。Factors such as exchange rate translation and changes in assets** combined to reduce the scale of foreign exchange reserves.
Wen Bin said that since the beginning of this year, China's economic operation has been generally stable, and the prosperity has rebounded. Production is stable and improving, holiday consumption is strong, and export margins are warming, which is conducive to the balance of payments and the smooth operation of the foreign exchange market, and lays the foundation for the scale of foreign exchange reserves to remain basically stable.
It is worth mentioning that the People's Bank of China's 15 consecutive months of increasing its holdings of ** is relatively rare and has attracted market attention.
Looking back at the data since November 2022, the PBOC's ** reserves have increased for the fifteenth consecutive month, with a cumulative increase of 9.55 million ounces (about 271 tons). Based on the latest international spot ** (US$2,034 ounces), the cumulative increase in holdings reached US$19.4 billion (about RMB 140 billion).
Zhao Qingming, vice president of the Institute of Exchange Management, said that the central bank continued to increase its holdings, mainly because the absolute and relative amounts of China's reserves are relatively low, and increasing reserves is also conducive to promoting the internationalization of the RMB.
Industry experts also pointed out that the People's Bank of China has increased its reserves for 15 consecutive months, which is conducive to improving the stability of official reserves and enhancing the resilience to external risks.
Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, said that the risk of public debt in the United States and other economies continues to rise, and the central bank's reasonable increase in reserves will help diversify risks, enhance the stability of official reserve assets, and enhance the resilience of the financial system. In terms of trends, the diversification of foreign exchange reserve assets in various countries has accelerated to reduce the over-dependence on a single currency and assets.
It is worth mentioning that for the whole of 2023, the PBOC made 225t net purchases, the highest among all countries, accounting for more than 20% of the total number of new central banks in the world.
According to the latest data released by the World ** Association in February, as of the end of December last year, China's ** reserves accounted for only 4 percent of official reserves3%, well below the global average of around 14%. The United States, Germany, Italy and other countries accounted for more than 65% of the reserves in the same period.
Analysts pointed out that at present, the proportion of reserves in China's foreign exchange reserves is still low, and the total reserves of China and the total amount of foreign exchange reserves still do not match.
Soaring all the way.
Under the strong investment demand, **all the way**. The average gold price in 2023 reached 1940$54 an ounce, 8% higher than in 2022 and a record high. Since the beginning of 2024, the gold price has continued to rise. As of press time, London Gold is now trading at $2,032 an ounce, **02%, standing at the $2,000 ounce mark.
According to UBS's latest report, it will reach $2,200 an ounce in 2024, and there will also be an "eye-catching" performance.
UBS said that ** and *** are expected to continue to climb in 2024 amid expectations of a rate cut by the Federal Reserve.
"We expect that the Fed's easing of monetary policy will push higher*** as well, which will also lead to a depreciation of the dollar," said UBS strategist Jonny Tevez. She expects gold to reach $2,200 an ounce by the end of the year. Gold prices tend to have an inverse relationship with interest rates. As interest rates fall, they become more attractive compared to investments such as bonds. On the other hand, falling interest rates have led to a depreciation of the US dollar, making ** cheaper for international buyers, which has boosted demand.
Although there is still a great deal of uncertainty about the timing and magnitude of the Fed's rate cuts, UBS still maintains its expectations for the Fed to ease policy. Since the outbreak of the Israeli-Palestinian conflict on October 7 last year, the appeal of ** as a safe-haven asset has increased, causing gold to hit an all-time high of $2,100 an ounce last month.
"We do believe that investors will start to increase their allocations as macro uncertainty and geopolitical risks rise," Teves said. Regarding the outlook, Teves said: "In the event that the Fed eases monetary policy, we think it will perform very well. It may outperform **.
Guosheng also believes that the short-term pivot remains resilient, and the market is still waiting for the Fed to have a more certain monetary policy shift signal or guidance.
Editor-in-charge: Tactical Heng.
Proofreading: Su Huanwen.
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