China: Direct Trading Of RMB With SGD Commences

More than one year after the announcement, direct RMB-SGD trading will commence tomorrow, 28 Oct 2014 as the pace of RMB internationalization accelerates further

    The latest development should boost the appeal of offshore RMB in the region, given Singapore’s role as a financial center and the increased trade and investment linkages between ASEAN and China. The potential of RMB’s acceptance and usage in ASEAN should rise along with the increased influence of China as well, and the direct SGD and RMB trading could be a main catalyzer.

    In terms of outlook for the RMB itself, direct quoting is unlikely to have significant impact near term, although increased internationalization means that 2-way fluctuations of the currency will be here to stay, in place of the one-way appreciation. The RMB is on track to meet our target of 6.10/USD for end-2014 from around 6.12/USD currently and we are optimistic of upside for the RMB towards 6.00-6.05/USD by end-2015.