In an announcement, Hong Kong Shanghai Bank jad sold about 500 million yuan or US$81.54 million two year notes in the Singapore bourse last Monday. This was the launch of the first dim sum bond in the city since the opening of yuan clearing processes.
China is in the process of relaxing controls on the currency, known as renminbi or RMB outside of China. The goal is to gradually increase the use of the yuan as currency in foreign markets.
The first yuan clearing done in Singapore was undertaken by Industrial and Commercial Bank of China. Singapore is the fourth largest foreign currency trading center in the world and is the main market for Asia based oil and commodity trading.
In another move, the Singapore Exchange also launched an accessory depositary service for yuan denominated bonds commonly known as dim sum bonds. This is another bid to assist in the development of Singapore as an offshore hug for both issuers and investors for these kinds of bonds.
Yuan clearing services are already in place in Hong Kong and Taiwan. Before these services became available, much of the activity had to pass through Hong Kong to be cleared by the Bank of China before reaching Singapore.
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