Singapore's central bank today said it will make financial investments in the Chinese yuan as part of its foreign reserves from this month, recognising the currency's increasing global acceptance.
The Monetary Authority of Singapore said that it has been making financial investments in renminbi (RMB) or yuan through China's Qualified Foreign Institutional Investor and interbank bond market schemes since 2012.
MAS said that the move recognises steady and calibrated liberalisation of China's financial markets, as well as the growing acceptance of RMB assets in the global portfolio of institutional investors.
It added that although these investments were part of MAS' foreign assets, it is not possible to include them in official foreign reserves as there had previously been restrictions on the repatriation of these funds.
MAS deputy managing director Jacqueline Loh said: "China's calibrated financial liberalisation in the past year has encouraged growing international acceptance of the RMB."
MAS also cited how access to China's interbank bond market has been granted to most foreign institutional investors.
"The 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," MAS said in a statement.
The move by MAS comes after 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 Reservesbasket from October 1 this year, it said.
