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Companies using Singapore as their regional HQ are expected to include the Chinese FX in their operations post the establishment of a RMB clearing bank, but several challenges could slowdown the pace of adoption.
The establishment of a renminbi clearing bank in Singapore will spur multinational corporations' (MNCs) adoption of the Chinese currency that have regional treasury centres set up in the city, but the local currency strength vis-a-vis the renminbi and other obstacles could hinder this trend.
Companies that have established their regional headquarters and treasury centres in Singapore - as a result of the government's push to promote the city as a liquidity hub - will most likely add the renminbi to their suite of currencies. This is notably true for Chinese corporates that have been internationalising as well as European and US businesses that have operations in the Mainland, note experts.
"For us to really make Singapore a vibrant renminbi market, there's a need to look at the sources and users of the Chinese currency here. The broader market outside China is still operating in US dollars as the main currency," said Singapore-based Melvyn Low, country head for transaction services at Citi to Asiamoney PLUS in a telephone interview on February 19. "But we feel that with the set up of this renminbi centre here in Singapore, there would potentially be more a switch to invoicing in renminbi."
"The Chinese MNCs are out here, so are the US and European MNCs that have been here all this while, and truly use Singapore as a treasury and re-invoicing centre," he added. "We do have...