The commencement of Monetary Authority of Singapore (MAS) enabled clearing of Renminbi (RMB) spot trades is to go live on 27 May 2013, with Deutsche Bank announcing that it is to execute the first Singapore dollar (SGD)/RMB spot trade to be cleared out of the Asian city state. The trade involves a Singapore-based commodities company.
Deutsche Bank is also launching live pricing for offshore RMB with local currency pairs, across all its onshore Asian locations, covering the Hong Kong Dollar (HKD), Indian Rupee (INR), Indonesian Rupiah (IDR), Korean Won (KRW), Malaysian Ringgit (MYR), Philippine Peso (PHP), Taiwan Dollar (TWD), Thai Baht (THB), and so forth. It claims to be the first bank in the market providing this comprehensive level of liquidity.
“Deutsche Bank is proud to be the first to provide RMB liquidity versus local currency pairs across Asia,” said David Lynne, Deutsche Bank’s head of fixed income and currencies and commodities, Asia. “Roughly 30% of China’s total trade volume is conducted with Asia excluding Japan. Direct local currency/RMB pricing will help encourage increased RMB-denominated trade settlement by facilitating corporate hedging of RMB exposure, unlocking yet more potential for the continued globalisation of the RMB.”
Live clearing in Singapore represents a major milestone in the development of RMB, as Singapore is widely expected to serve as a gateway for the usage of RMB in Southeast Asia, as the primary financial, commodities, and currency trading hub for the region. China is the largest trading partner to the Association of Southeast Asian Nations (ASEAN). China’s imports from ASEAN nations have grown by almost 70% in the last five years, significantly outpacing growth of imports from the rest of the world.
Deutsche Bank’s Asia-Pacific head of global transaction banking, Lisa Robins, added: “As trade flows between China and Southeast Asia continue to grow, it is natural that more companies will consider using the RMB as their currency of choice for bilateral trade. With Deutsche Bank’s extensive footprint in ASEAN, we are well positioned to support our clients with their transactional needs in this part of the region, which we believe has tremendous potential.”