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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Ava Foreign Exchange Decision Analysis]: Collection of positive and negative news that affects the foreign exchange market". Hope it will be helpful to you! The original content is as follows:
In the aihuaforex.complex game of the foreign exchange market, various news is like the change of the weather vane, always controlling the market trend and investors' decisions. On March 13, news gathered from multiple aspects, which had a profound impact on the foreign exchange market.
Favorite News
Long-term derivatives trading fee reduction
China Foreign Exchange Trading Center announced a major positive policy on March 12. From April 1, 2025, the derivatives trading fee for the interbank RMB foreign exchange market for 2-year (inclusive) or above period will be fully exempted, and the temporary exemption period will be up to three years. This measure covers a variety of RMB foreign exchange derivatives such as forwards, swaps, currency swaps and options. The reduction and exemption of handling fees is aimed at further improving the quality and efficiency of financial services for the real economy and helping financial institutions better serve enterprises' long-term exchange rate risk management needs. For enterprises, this will reduce the cost of long-term exchange rate risk management, encourage more enterprises to participate in hedging, stabilize operating costs, and enhance enterprises' ability to deal with exchange rate fluctuations. From a market perspective, this policy will help enhance the activity of the foreign exchange market, promote the prosperity of foreign exchange derivatives trading, enhance the depth and breadth of the market, attract more investors to participate, and promote the development of the RMB foreign exchange market in a more mature and efficient direction.
The scale of foreign exchange reserves increased
Data released by the State Administration of Foreign Exchange on March 7 showed that as of the end of February 2025, my country's foreign exchange reserves reached US$322.72 billion, an increase of US$18.2 billion aihuaforex.compared with the end of January, an increase of 0.57%. The growth of foreign exchange reserves has benefited from many factors. On the one hand, during February, it was mainly affected by the economyInfluenced by factors such as macroeconomic policies and economic data, monetary policy expectations of major central banks, the US dollar index fell, and global financial asset prices rose and fell. The aihuaforex.combined effects of exchange rate conversion and asset price changes have promoted the increase in the scale of foreign exchange reserves. On the other hand, my country's economic foundation is stable, has many advantages, strong resilience and great potential. Foreign trade maintains a certain surplus in scale, and the attractiveness of RMB assets to foreign capital continues to increase. These fundamental factors provide solid support for the stable growth of the scale of foreign exchange reserves. The increase in the scale of foreign exchange reserves has enhanced the market's confidence in my country's economy and currency, helped stabilize the RMB exchange rate and enhance the RMB's position in the international foreign exchange market.
The central bank continues to increase its holdings of gold reserves
Data released by the People's Bank of China show that at the end of February 2025, my country's gold reserves were 73.61 million ounces, an increase of 160,000 ounces from the end of January, and have been increasing for four consecutive months. As an important part of the diversification of international reserves, gold continues to increase its reserves. Under the influence of global geopolitics and other factors, the demand for gold as a tool for wealth preservation and hedging is increasing. The central bank's increase in holdings of gold can enhance the credit of sovereign currencies and create favorable conditions for promoting the internationalization of the RMB. From the perspective of optimization of international reserve structure, my country's gold reserves still have a lot of room for improvement in the proportion of reserve assets. Continuous increase in gold holdings will help achieve diversification of the international reserve structure, improve the security and stability of my country's foreign exchange reserves, and thus have a positive impact on the RMB exchange rate and the foreign exchange market.
Bold news
The impact of uncertainty in global economic growth on the demand side
Although the foreign exchange market has received good news in some areas, the uncertainty in global economic growth still poses a potential threat to the foreign exchange market. The weak U.S. economic data and weaker risk appetite in overseas markets have lowered market expectations for global crude oil demand growth. This trend indirectly affects the foreign exchange market, because as an important aihuaforex.commodity, crude oil has price fluctuations closely linked to the global economic situation, which in turn affects the trade balance and currency exchange rates of relevant countries. When crude oil demand is expected to decline, countries that rely on crude oil exports may face pressure to reduce export income, and their currencies may be subject to depreciation pressure in the foreign exchange market; and for crude oil importers, although import costs may theoretically decrease, the overall economic downward risks brought about by slowing economic growth may also inhibit the appreciation potential of their currencies, leading to an increase in overall volatility in the foreign exchange market and a certain degree of blow to investor confidence.
Geopolitical tensions have sparked market concerns
U.S. President Trump recently made remarks on social media, saying he is "strongly considering" sanctions on Russian banks and imposing tariffs on Russian products, and also claimed that he plans to intercept Iranian tankers on key waterways. These remarks have caused market concerns about the escalation of geopolitical conflicts to a sharp rise. Tensions in the geopolitical situation often trigger a sharp rise in risk aversion in the market, and investors are seeking safe-haven assets, such as the US dollar, yen, and yellow.gold, etc., while some risk currencies may be sold. This change in capital flow will lead to large fluctuations in the currency exchange rate in the foreign exchange market, disrupting the stable operation of the market and increasing trading risks. Once the relevant sanctions are implemented, the crude oil supply of Russia and Iran, two major crude oil exporters, may be seriously affected, which will trigger panic in the supply shortage of the global crude oil market, further aggravate the uncertainty of the global economy, and have a more far-reaching impact on the foreign exchange market.
In general, the current foreign exchange market is in a aihuaforex.complex situation where positive and negative news are intertwined. The positive factors such as long-term derivative transaction fees reduction, the increase in foreign exchange reserve scale and the increase in the central bank's holdings of gold reserves have been injected into the market; however, negative factors such as uncertainty in global economic growth and geopolitical tensions have brought many challenges and risks to the market. When Investors conduct foreign exchange transactions, they need to pay close attention to the dynamic changes in these news, aihuaforex.comprehensively analyze the market situation, and make prudent decisions to cope with the aihuaforex.complexity and change of the foreign exchange market.
The above content is all about "【Ava Ava Foreign Exchange Decision Analysis】: Collection of Positive and Negative News that Influence the Foreign Exchange Market". It was carefully aihuaforex.compiled and edited by the Avatrade Foreign Exchange Editor. I hope it will be helpful to your trading! Thanks for the support!
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