On January 7th, the State Administration of Foreign Exchange (hereinafter referred to as the "SAFE") released data on the scale of foreign exchange reserves as of the end of December 2024. Data shows that as of the end of December 2024, China's foreign exchange reserves amounted to $3202.4 billion, a decrease of $63.5 billion or 1.94% from the end of November 2024. The State Administration of Foreign Exchange stated that in December 2024, the US dollar index rose and global financial asset prices fell overall due to factors such as expectations of central bank monetary policies and macroeconomic data in major economies. The combined effect of exchange rate conversion and asset price changes resulted in a decrease in the scale of foreign exchange reserves for the month. Wen Bin, Chief Economist of Minsheng Bank, stated in an interview with reporters that although the Federal Reserve cut interest rates by 25 basis points as scheduled in December 2024, the tone of the interest rate cuts showed a hawkish tone. The market's expectations of the US economy not landing and inflation rising again continue to strengthen. It is expected that the space for interest rate cuts will be limited and the path of interest rate cuts will slow down in 2025, which will promote the strengthening of the US dollar index and the overall decline of global asset prices. Due to the combined effects of exchange rate conversion and asset price changes, foreign reserves decreased to $3202.4 billion by the end of December 2024. Specifically, in December 2024, in terms of exchange rates, the US dollar index rose by 2.6% month on month, with major non US currencies collectively depreciating. The Japanese yen, euro, and pound fell by 4.7%, 2.1%, and 1.8% against the US dollar, respectively; In terms of bond prices, the yield of 10-year US Treasury bonds increased by 40 basis points to 4.58% month on month, the yield of 10-year European bonds increased by 26 basis points to 2.45%, and the hedged global bond index denominated in US dollars fell by 0.8%; In terms of stock prices, the S&P 500 index fell 2.5%, while the European Stoxx 50 index fell 1.1%. The State Administration of Foreign Exchange stated that the overall operation of China's economy is stable and steady with progress, and high-quality development is solidly promoted, which is conducive to maintaining the basic stability of the scale of foreign exchange reserves. Overall, the scale of China's foreign exchange reserves will remain relatively stable throughout 2024 Wang Qing, Chief Macro Analyst of Dongfang Jincheng, told reporters that China's exports have remained strong in recent times, cross-border capital flows have remained overall stable, and with the introduction of a package of incremental policies, economic growth momentum has rebounded, providing important support for maintaining basic stability in the scale of foreign reserves. Wen Bin also believes that the recent package of incremental policies has significantly boosted the macro economy and capital markets, and the increased attractiveness of RMB assets is also a strong support for foreign exchange reserves. In the next stage, China will continue to promote the implementation and effectiveness of various stock policies and incremental policies, laying a solid foundation for maintaining overall balance of international payments. (New Society)