More offshore yuan hubs, no fears for S'pore

The Straits Times

Singapore's ambition to become a leading offshore yuan trading hub is unlikely to be dented by the entry of new players in the market, according to analysts.

The goal - fast becoming reality - got another boost on Tuesday when Singapore and China signed a raft of financial agreements, including a move to allow direct trading of their currencies.

The deal also means it will be easier for Singapore investors to buy stocks in mainland China.

Experts said the Republic should not be wary of rivals such as Britain, which last week signed a deal with Beijing that designated London an offshore centre for handling yuan investments.

"Singapore can still get a big share of the offshore yuan pie. The pie is not fixed, and with greater awareness of the yuan, the pie is growing rapidly," said OCBC Bank economist Tommy Xie.

Beijing has long carefully controlled internationalisation of its currency but has moved more swiftly in the past couple of years.

Late last month, as part of the launch of the free trade zone in Shanghai, China allowed the convertibility and cross-border use of the yuan under a pilot programme within the zone.

Developments such as these mean higher demand globally, with more investors outside of China holding the yuan, said Royal Bank of Scotland chief China economist Louis Kuijs.

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