Spore, China launch direct trading of currencies SINGAPORE and China will start direct currency trading today, in a move set to lower the cost of doing business. It will also boost the already strong trade links between the two as Beijing pushes to internationalise the yuan. Chinese Vice-Premier Zhang Gaoli announced the move yesterday at a high-level bilateral meeting in eastern Suzhou that he co-chaired with Singapore Deputy Prime Minister Teo Chee Hean. Mr Teo indicated that direct currency trading could be a game-changer. This is a very major and significant development. I still remember my first visit to China 30 years ago. The currency was not even unified then and we had foreign exchange certificates. (The yuan) was not tradable at all, Mr Teo told reporters. But today, we have direct trading between the (yuan) and the Singdollar... It will reduce the cost of doing business and make it more convenient, he added. Before this, companies that wanted to convert large amounts of the Singapore dollar to yuan, or vice versa, had to do so via an intermediate currency. Last year, bilateral trade rose 11 per cent year on year to reach $115.2 billion. Singapore is Chinas largest foreign investor with US$7.3 billion (S$9.3 billion) worth of investments last year, while China is Singapores largest trading partner. Yesterday, the Monetary Authority of Singapore also said it has proposed to allow China-incorporated financial institutions to issue yuan-denominated debt instruments in Singapore directly. This will help to diversify long-term funding for Chinese financial institutions by allowing them to tap the global institutional investor base in Singapore, it added in a statement. Amid reforms to internationalise its currency, China has launched direct trading with several currencies: the euro, the British pound, the Japanese yen and the New Zealand dollar. Direct trading was one of the key outcomes at last years Joint Council for Bilateral Cooperation (JCBC) meeting in Singapore. But no official start date was given then. Mr Teo is on a three-day trip that kicked off on Sunday in conjunction with the 20th anniversary of the Suzhou Industrial Park (SIP) and the 11th JCBC. He said a proposed third government- to-government project in Chinas western region was discussed, with the aim of reaching a conclusion in concept, location and some programmes by next year. The SIP and Tianjin Eco-City, two government-to-government projects launched in 1994 and 2008 respectively, have played key roles in earning Singapore the title of the largest and busiest yuan centre outside of China. Companies in both parks, for instance, can take yuan loans from banks in Singapore. Loans of almost two billion yuan (S$417 million) have already been made since the initiatives started three months ago, according to MAS. Yesterday, leaders from both sides stressed the need to come up with innovative ways to keep the parks relevant to Chinas development stage. We hope to see some of these projects that weve been discussing reach a good point next year to help us mark the 25th anniversary of diplomatic ties between China and Singapore in a significant way, Mr Teo added. Singapore is also working with Beijing on a wide range of issues, with five memorandums of understanding inked yesterday. They include cooperation on environmental issues, exchange programmes for officials, intellectual property and a framework agreement for the National University of Singapore to expand its presence in the SIP.
Posted on: Tue, 28 Oct 2014 04:12:58 +0000
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