The State Administration of Foreign Exchange of China has released the latest foreign exchange reserve data. As of the end of last month, China's foreign exchange reserves have increased for the fourth consecutive month, with the latest figures reaching 3,184.5 billion US dollars, an increase of 56.8 billion compared to the previous month.

China is clearly leading in this competition!

Over this period, China and the United States have been playing their own games and making their own moves. The United States continues to raise interest rates, while China keeps reducing its holdings of U.S. Treasury bonds.

It is evident that China's response has had a more noticeable effect. Consequently, for four consecutive months, China's foreign exchange reserves have been increasing, growing by 155.6 billion US dollars.

01. Latest Foreign Reserves

In the first three quarters of last year, China's foreign exchange reserves fell for three consecutive quarters.

However, after entering the fourth quarter, on a monthly basis, China's foreign exchange reserves have been continuously rising for three months, completely reversing the previous trend of continuous decline.

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By the end of December, the foreign exchange reserves had risen to 3,127.7 billion US dollars, an increase of nearly 100 billion US dollars compared to the annual low of 3,028.9 billion in September.

After January of this year, there was a significant increase of 56.8 billion US dollars compared to the previous month.

The continuous increase in foreign exchange reserves over the past four months is related to two major factors.Firstly, the US Dollar Index continues to decline, and the value of the US dollar is depreciating, which leads to an appreciation of our foreign exchange reserves' non-US dollar assets when they are converted into US dollar terms.

Secondly, China has always maintained a significant trade surplus, with an annual cumulative surplus reaching as high as 5.9 trillion yuan by the end of last year. The continuous surplus is a significant supplement to our country's foreign exchange reserves.

02, US Dollar Depreciation

The Federal Reserve is still continuously raising interest rates, still hoping to push the value of the US dollar up and promote capital inflows to the United States through interest rate hikes.

However, it is clear that the current effect is getting worse, and even a counter-effect has begun to emerge. The decline of the US dollar has become an irreversible trend.

Correspondingly, the status of the US dollar is being continuously weakened.

A report from Credit Suisse in early February showed that major central banks around the world are continuously diversifying their investments, trying to reduce their dependence on the US dollar as much as possible. This also helps to avoid the risk of future US sanctions, leading to a continuous decline in the proportion of the US dollar in global foreign exchange reserves.

This can also be seen from China's foreign exchange reserves. We are continuously selling US Treasury bonds, and the latest data provided by the US Department of the Treasury shows that our holdings of US Treasury bonds have been reduced to 870 billion US dollars, a significant decrease of 210 billion US dollars compared to the previous year.

At the same time, the People's Bank of China has increased its gold holdings for the third consecutive month, and the current gold reserves have risen to 65.12 million ounces.

As the status of the US dollar continues to decline, the status of gold is slowly being restored. With sufficient gold reserves as a support, it is believed that the renminbi will have a greater appreciation space in the future.