Last year the BIS listed Singapore as the largest FX center in Asia and the third biggest in the world; now it has overtaken London in offshore RMB clearing, which until now was number one…
Back in March we reported that the top offshore RMB hub remained London (excluding Hong Kong and Mainland China) but that Singapore volumes had been surging. Singapore was right behind London in weight and rank and was gaining volume. Well, it did not take long for the latest SWIFT numbers to come in and confirm that Singapore has passed London to become #1 in offshore RMB clearing (excluding HK and China Proper). New SWIFT data released today shows that Singapore’s RMB payments value increased by 375% between March 2013 and March 2014, making Singapore number one in terms of RMB world payments value, excluding China and Hong Kong.
Singapore’s weight represents 6.8% of the overall RMB payments value, second behind Hong Kong, which still leads with 72.4%. London overtook Singapore in June 2012, but, since February 2014, it has slipped behind Singapore despite a good growth rate of 203% year-over-year from 2013. London now carries the weight of 5.9%.
Claus Kwon, Head of Securities Markets, Asia Pacific, at SWIFT says: “Ever since last year’s nomination of ICBC as a clearing bank in Singapore, we have been expecting the Singapore RMB payments flows to accelerate, especially as Chinese companies use it as a hub to reach ASEAN countries. We are now anticipating securities traffic to ramp up as well. In April, the Monetary Authority of Singapore indicated in a speech that they are now looking to expand from a strong base in trade financing to developing a broader range of RMB investment offerings, particularly in capital markets and asset management.”
Mr. Kwon adds: “The United Kingdom and Singapore appear to be taking a collaborative approach to serve RMB internationalization. For example, this past February, the UK and Singapore governments announced the new UK-Singapore Financial Dialogue, a private sector forum designed to boost the development of the offshore Renminbi market.”
In March 2014, the RMB strengthened its position as the seventh-ranked global payments currency with a new record-high activity share of 1.62% (from 1.42% in February 2014). The RMB is gaining on the Canadian Dollar (CAD) at 1.83% and the Australian Dollar (AUD) at 1.84%. At a global level, RMB payments increased in value by 29.0% in March 2014 compared to February 2014, when all currencies increased by 13.4% during that same period.