Home Singapore Singapore in negotiations to accept the Chinese Yuan

Singapore in negotiations to accept the Chinese Yuan

yuan-singaporeChina is multiplying initiatives designed to test its currency, which is not convertible on foreign markets. The Chinese currency called the Yuan has for a long time been criticized for not being traded on the international money markets.

Chinese Yuan opening up

The internationalization of the Chinese currency, the yuan, is advancing with giant steps. Last Monday the Cheung Kong Group, controlled by billionaire Hong Kong Li Ka-shing, announced the introduction on the stock exchange of its real estate branch Hui Xian with shares denominated in Yuan. Up until now the only two companies to have done so are Caterpillar and McDonald's who have previously issued a Yuan-denominated bond on the Hong-Kong market last year.

Singapore financial market

Even the temple of finance in Southeast Asia that is Singapore is succumbing to the charms of the Chinese currency. The Central Bank of Singapore is in discussions with its Chinese counterpart to allow Yuan transactions in the City-State, said the Wall Street Journal. The decision is not made, but Singapore is "well located to facilitate trade flows with mainland China", said the monetary authority of the country.

China is willing to trade the Yuan

China has already clearly shown its willingness to multiply credit agreements across the region be it with South Korea, Malaysia and Indonesia. China also made an agreement with Russia to trade their currency on the Moscow stock exchange. Since January 2011 the Bank of China has been allowing clients to conduct transactions in Yuan in the United States.

Financial power

The Chinese Government furthermore regularly expands the number of companies authorized to export and import in this currency. They are more than 70,000 to do so today. In total, the equivalent of $400 million is exchanged in Yuan every day across the world. This figure could increase to $3000 billion by 2015.

Singapore as a financial centre

For Singapore the chance to enter the arena is a way to increase its financial standing in Asia compared with Hong Kong and Tokyo. Singapore is also a member of Asean (Association of Southeast Asian nations) together with China, which represents a GDP (gross domestic product) of 4350 billion euros. It also signed an agreement last year with the Chinese under the terms of which it will be allowed to borrow up to 15.8 billion over three years.

Singapore as a casino destination

Singapore is also opening up its casino industry in direct competition with Macau and this new move in agreement with the Chinese authorities could prove to have a beneficial effect on tourists coming from China.