Enterprises sell foreign exchange income to designated foreign exchange banks at the exchange rate of the day, and banks collect foreign exchange and exchange it in RMB for enterprises. China has been using the foreign exchange settlement system.
Bank settlement means that an enterprise sells its foreign exchange income to a designated foreign exchange bank at the current exchange rate, and the bank collects foreign exchange and converts it into RMB for the enterprise. Since the founding of New China, the foreign exchange settlement system has been implemented.
However, the current foreign exchange settlement system has two characteristics:
First, at the same time of settlement of foreign exchange, the retention and settlement of foreign exchange were cancelled, and the management of foreign exchange quota was cancelled;
Second, the designated foreign exchange banks handle foreign exchange settlement instead of the central bank, and the local currency funds needed for foreign exchange settlement are solved by the designated foreign exchange banks themselves, and the central bank no longer provides them.
The surplus of foreign exchange settlement and sale means that the foreign exchange settlement amount of all customers is greater than that of all customers, indicating that the market has greater power to sell foreign currency. Because the foreign currency in the surplus of foreign exchange settlement and sale is finally bought by the central bank, forming foreign exchange reserves, the size of the surplus reflects the size of the central bank's intervention in the foreign exchange market.
The deficit of settlement and sale of foreign exchange means that the amount of foreign exchange purchased by all customers is greater than that of all customers, indicating that the market demand for foreign currency is greater than the market supply. Generally speaking, there will be pressure for RMB to depreciate. Similarly, the foreign currency funds with the deficit in settlement and sale of foreign exchange will still be provided by the central bank.
Summary: Then the surplus in the settlement and sale of foreign exchange turns into deficit, indicating that the relationship between supply and demand of foreign currency and RMB in the market has reversed, and the foreign currency has changed from oversupply to short supply, and the RMB exchange rate will also change from appreciation expectation to depreciation expectation.