- China seeking wider international use of its currency
- MAS says move reflects China’s market liberalization
Singapore plans to include yuan-denominated assets in its foreign reserves from this month as China seeks wider international use of its currency.
The move recognizes the growing acceptance of yuan assets in the portfolios of institutional investors, as well as liberalization of Chinese financial markets, the Monetary Authority of Singapore said in a statement. MAS has been making yuan-denominated financial investments since 2012.
Chinese authorities have been intensifying efforts to free up its capital markets, with recent measures including relaxing controls over foreign investors’ access to its domestic markets and scrapping quota controls over the interbank bond market. With an estimated $1 trillion in capital flowing out of China in the past year, the government is seeking to stabilize the yuan before it joins the International Monetary Fund’s reserve basket of currencies in October.
“The inclusion of yuan assets in MAS’ official reserves is timely,” said MAS Deputy Managing Director Jacqueline Loh, noting that China’s recent efforts have “encouraged growing international acceptance of the yuan.”
China this month announced it will give a 250 billion yuan ($38 billion) investment quota to the U.S., the largest after Hong Kong.