RMB-Deposits In Singapore Have Surged, More Upside Potential - MAS Official

Tom Burroughes

14 March 2014

Renminbi-denominated deposits in Singapore surged 70 per cent in the period from March last year to the end of December, standing at RMB200 billion ($32.6 billion), highlighting the city-state’s importance as a hub as the Chinese currency grows in international stature, the has said.

Over the same period, RMB-denominated loans, mainly trade financing, grew by almost 2 5 per centto reach over RMB300 billion. Singapore accounted for about 60 per cent of RMB trade finance outside China and Hong Kong, the MAS has noted.

The figures were recited by Leong Sing Chiong, assistant managing director, speaking at a conference earlier this week organised by the Asia Securities Industry & Financial Markets Association.

As the Renminbi – or yuan – has risen in status as a global trading currency, financial centres such as Singapore are battling to win market share. Renminbi-based wealth management products are also growing in use, as is issuance of bonds denominated in the currency, for which private banks, among others, have been buyers.

In his speech, the MAS official noted that on the eve of last year’s Lunar New Year holidays, it was announced that ICBC Singapore would be appointed as the RMB clearing bank for Singapore. ICBC Singapore launched its RMB clearing services in May last year.

“Given Singapore’s role as a hub for multinational corporations, many of whom maintain regional treasury centres here, we are seeing strong RMB deposit growth fuelled by such regional treasury centres. This gained traction particularly after the PBC relaxed rules in July last year to allow corporates operating in China to channel surplus RMB offshore for centralised cash management,” he said.

The Singapore Exchange recently announced it will expand its suite of foreign exchange futures to include RMB currency futures in the third quarter this year.

Even without full convertibility, the use of the Renminbi as a trade currency has soared in the last five years, the MAS said. As a payment currency, the unit has leapfrogged from 20th position in 2012 to 7th in 20141. RMB trade settlement as a proportion of China’s total trade has grown from 3 per cent in 2010 to 16.5 per cent in 2013.

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