Singapore, HK vie for yuan gateway

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yuanAfter Singapore doubled its currency swap agreement with China in March, the city-state has been given the upper hand over Hong Kong in becoming the gateway to ASEAN in trading China’s currency, the yuan.

In an agreement signed on March 7, the People’s Bank of China committed to further developing the swap facility with the Monetary Authority of Singapore by doubling it from 150 billion yuan ($24 billion) to 300 billion yuan ($48.3 billion) just after the city-state became the third offshore center for the Chinese currency in February.

Hong Kong and Macau, both special autonomous regions that hail to Beijing, are the only other two financial hubs outside of China that can sell the yuan.

Singapore’s swelling reserves of Chinese yuan reconfirms the importance of economic ties with ASEAN, which has seen a sling-shot rise in trade with China since the 10-nation bloc entered into a free trade agreement with the world’s second largest economy on January 1, 2010.

ASEAN exports to China have increased from $22 billion in 2002 to $195.8 billion at the end of 2012, according to figures from DBS, a leading Singaporean bank.

Singapore’s dynamic economic position as the bellwether of ASEAN in finance and technological development makes it well positioned to facilitate the wider use of the Chinese yuan in ASEAN trade.

Additionally, China has a trade deficit with ASEAN, and in the long-term the yuan clearing line in Singapore will help promote third-party use in the region.

“We expect the swap line to help boost the offshore yuan market and advance the proceeds of the currency’s  internationalisation,” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, was quoted as saying by Bloomberg.

“We expect further swap lines and offshore markets to be established in coming years.”

ASEAN is an important source of raw materials and commodities for China, with timber and petroleum forming the bulk of bilateral trade between the two regions.

 

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Reading Time: 2 minutes

After Singapore doubled its currency swap agreement with China in March, the city-state has been given the upper hand over Hong Kong in becoming the gateway to ASEAN in trading China’s currency, the yuan.

Reading Time: 2 minutes

yuanAfter Singapore doubled its currency swap agreement with China in March, the city-state has been given the upper hand over Hong Kong in becoming the gateway to ASEAN in trading China’s currency, the yuan.

In an agreement signed on March 7, the People’s Bank of China committed to further developing the swap facility with the Monetary Authority of Singapore by doubling it from 150 billion yuan ($24 billion) to 300 billion yuan ($48.3 billion) just after the city-state became the third offshore center for the Chinese currency in February.

Hong Kong and Macau, both special autonomous regions that hail to Beijing, are the only other two financial hubs outside of China that can sell the yuan.

Singapore’s swelling reserves of Chinese yuan reconfirms the importance of economic ties with ASEAN, which has seen a sling-shot rise in trade with China since the 10-nation bloc entered into a free trade agreement with the world’s second largest economy on January 1, 2010.

ASEAN exports to China have increased from $22 billion in 2002 to $195.8 billion at the end of 2012, according to figures from DBS, a leading Singaporean bank.

Singapore’s dynamic economic position as the bellwether of ASEAN in finance and technological development makes it well positioned to facilitate the wider use of the Chinese yuan in ASEAN trade.

Additionally, China has a trade deficit with ASEAN, and in the long-term the yuan clearing line in Singapore will help promote third-party use in the region.

“We expect the swap line to help boost the offshore yuan market and advance the proceeds of the currency’s  internationalisation,” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, was quoted as saying by Bloomberg.

“We expect further swap lines and offshore markets to be established in coming years.”

ASEAN is an important source of raw materials and commodities for China, with timber and petroleum forming the bulk of bilateral trade between the two regions.

 

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