SINGAPORE: Singapore’s central bank yesterday said it would make financial investments in the Chinese yuan as part of its official foreign reserves from this month, reflecting the currency’s increasing international acceptance.
The Monetary Authority of Singapore (MAS) said its decision “recognizes the steady and calibrated liberalization of China’s financial markets and the growing acceptance of [yuan] assets in the global portfolio of institutional investors.”
MAS has been making financial investments in the yuan since 2012 according to a scheme that allows foreign institutional investors to buy equities and bonds listed on China’s domestic exchanges.
It also buys bonds in China’s over-the-counter bond trading market, which was opened to foreign central banks in 2010.
While the investments were part of MAS’ foreign assets, they were excluded when computing the foreign reserves because of restrictions on the repatriation of the funds, the central bank said.
“Over the past year, China has taken significant steps to liberalize access to its foreign exchange and securities markets for foreign institutional investors,” the MAS said in a statement.
“For example, access to China’s interbank bond market was granted to most foreign institutional investors and investment quotas were eliminated,” it said.
“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,” it added.
Singapore’s official foreign reserves totaled US$248 billion as of end of last year, according to data from the MAS Web site.
