Singapore’s RMB Business Up 80% in Three Months
Aug. 6 – Singaporean banks, arguably the financial apex of ASEAN, have reported an 80 percent increase in the number of local companies using China’s national currency, the renminbi (RMB), to settle transactions. Singapore became an official RMB trade center this last May, when China’s ICBC began offering RMB clearing services. Prior to this, Singapore-based banks had to rely on their relationships with banks in Hong Kong to obtain access to RMB.
The move comes as Singapore strengthens its position as a financial hub for Southeast Asia, acting as a go-between for China and the rest of Asia in both the offshore and China markets. Fully-licensed banks in Singapore, such as the United Overseas Bank, HSBC and Standard Chartered, have all stated a rise of RMB settled business of at least 80 percent in the three months since May, including the conversion of the RMB into U.S. dollars.
According to HSBC, some 53 percent of businesses based in China have said they would be prepared to offer discounts on their products of up to 5 percent if the sale price was settled in RMB. The new position of Singapore as an RMB trade hub also means that businesses generating excess cash in China may use Singapore as a settlement base to provide liquidity to other subsidiaries in other countries.
However, some analysts sounded a note of caution, and UOB’s transaction banking head has reminded that “the offshore RMB rate can be highly volatile.”
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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