Malaysia To Benefit From RMB's Regained Momentum

KUALA LUMPUR, July 25 (Bernama) -- Malaysia is expected to benefit from the Renminbi's (RMB) regained momentum in the international market due to the country’s position as a gateway to China and ASEAN. HSBC Bank Malaysia Chief Executive Officer Mukhtar Hussain said given China's significance as Malaysia's largest trading partner and its position as a partner in the Belt and Road Initiative (BRI), the settlement of trade and investments in the RMB will significantly lower costs. “This will promote greater cross-border trade, as well as investment activity, thus increasing the usage of the currency. “Small and medium enterprises (SMEs) can also minimise exposure to exchange rate fluctuations of the US dollar and reduce the cost of doing business in China by capitalising on the RMB clearing house,” he said in a statement Tuesday. HSBC said the RMB’s internationalisation seems to have slowed the past year, but behind the scenes, China continues to enhance its financial infrastructure, so as to increase the global usage of the currency. “The cross-border use of the Chinese currency decreased significantly in 2016. According to SWIFT, a network that banks around the world use to send and receive money, the value of international renminbi payments fell by nearly 30 per cent last year,” it added. Despite the decrease in the cross-border use of the RMB last year, HSBC said the fact remains that China is committed to implementing foreign-exchange and financial reforms, opening up its economy and financial markets and promoting the RMB as an international currency. It also said the offshore renminbi market may be facing short-term challenges – trade settlement has slowed down and deposits have shrunk – but remains strategically important. “Launching cross-border investment schemes such as Bond Connect will improve the breadth, depth and health of the offshore RMB market, while at the same time providing renewed momentum to the currency's internationalisation,” it added. According to recent SWIFT data, the RMB bounced back to its position as the sixth most active currency for global payments with overall RMB payments value increasing by 14.62 per cent compared to April 2017. -- BERNAMA