China's foreign exchange market reports steady operations in Q1

China's foreign exchange market saw generally stable operations in the first quarter of 2025 despite increased volatility in international financial markets, the State Administration of Foreign Exchange said on Tuesday.

In the first quarter, the country's net inflow of cross-border capital from the trade of goods totaled 206.3 billion U.S. dollars, registering rapid year-on-year growth, said Li Bin, deputy head of the administration.

Additionally, foreign holdings of domestic bonds increased by a net total of 26.9 billion dollars from February to March, Li said.

As of Monday, the onshore RMB spot exchange rate against the U.S. dollar stood at 7.288, appreciating by 0.1 percent from the end of 2024. The two-way fluctuation of the RMB exchange rate is a normal market movement, which also reflects the support provided by underlying economic fundamentals, he said.

Despite growing external uncertainties and instability, China is accelerating the implementation of more proactive and effective macro policies, and advancing policy execution in a timely manner, he noted. With multiple strengths, strong resilience and vast potential, the Chinese economy will continue to support the stable operations of the foreign exchange market.

Going forward, China will introduce new incremental policies when necessary, treat the expansion of domestic demand as a long-term strategic priority, and promote the integrated development of technological and industrial innovation, providing continued support for the stability of the RMB exchange rate and the sound operations of the foreign exchange market, Li said.

He went on to say that the administration will continue deepening reform and opening-up in the foreign exchange sector, and introduce policies to support cross-border trade and facilitate cross-border investment and financing, aiming to stabilize foreign trade and foreign investment.

Foreign exchange regulators will continue to strengthen their monitoring of the foreign exchange situation, maintain exchange rate flexibility, and effectively leverage the exchange rate's role as an automatic stabilizer for the macro economy and the international balance of payments, Li said.

At the same time, efforts will be made to enrich China's macro-prudential toolkit for the management of cross-border capital flows, firmly correct pro-cyclical market behaviors, guard against risks of exchange rate overshooting and abnormal cross-border capital movements, and safeguard national economic and financial security.