Singapore’s renminbi investments to be part of official foreign reserves

SINGAPORE, June 22 — The Monetary Authority of Singapore (MAS) today announced that it will include its Renminbi (RMB) financial investments as part of its Official Foreign Reserves (OFR) from June 2016.

This move recognises the steady and calibrated liberalisation of China’s financial markets and the growing acceptance of RMB assets in the global portfolio of institutional investors.

“The inclusion of RMB assets in MAS’ OFR is timely. China’s calibrated financial liberalisation in the past year has encouraged growing international acceptance of the RMB,” MAS Deputy Managing Director Jacqueline Loh said in a statement here.

“An example is the set of initiatives between China and Singapore announced in November last year to further expand channels for cross border RMB flows and support the greater use of the RMB outside China,” she said.

Since 2012, MAS has been making RMB financial investments through China’s Qualified Foreign Institutional Investor and interbank bond market schemes.

Investing in China has provided portfolio diversification benefits for MAS.

Although part of MAS’ foreign assets, it was not possible to include these investments in OFR as there were previously restrictions on the repatriation of these funds.

Over the past year, China has taken significant steps to liberalise access to its foreign exchange and securities markets for foreign institutional investors.

For example, access to China’s interbank bond market was granted to most foreign institutional investors and investment quotas were eliminated.

Restrictions on inbound and outbound remittances have been lifted and no prior approval is now required for the repatriation of funds invested in China’s interbank bond market.

The International Monetary Fund (IMF) announced in November 2015 that the RMB met the criterion of a freely usable currency and would therefore be included in the special drawing rights (SDR) basket with effect from Oct 1, 2016.

IMF reported that RMB-denominated assets comprised 1.1 per cent of total foreign assets held by official holders of foreign exchange as at end-2014. — Bernama

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