Singapore and China will introduce direct trading between their currencies, helping the city-state compete with Hong Kong and London as an offshore yuan hub.
The two nations also agreed on a 50 billion yuan ($8.2 billion) quota for financial institutions in Singapore to invest in China’s domestic securities under the Renminbi Qualified Foreign Institutional Investor, the Monetary Authority of Singapore said in a statement today. The Southeast Asian nation will be one of several locations where Chinese institutional investors will be able to buy securities overseas with yuan under the new Renminbi Qualified Domestic Institutional Investor program, according to the statement.
“The ongoing internationalization of the renminbi continues to accelerate,” said Loh Boon Chye, Singapore-based deputy president for Asia Pacific at Bank of America Merrill Lynch. “Today’s announcement is the next stage in Singapore’s efforts to play a prominent role in the long-term development of this market.” Loh is also the chairman of the capital markets, fx & derivatives working group assisting the monetary authority.
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