KUALA LUMPUR: The Hong Kong and Shanghai Banking Corp Ltd (HSBC) expects more transactions in the Chinese currency, renminbi (RMB), in Malaysia via payments from foreign exchange and investment perspectives.
Its global head of internationalisation (global payments and cash management (Asia-Pacific), Vina Cheung, said last year, according to Society for Worldwide Interbank Financial Telecommunication (SWIFT) data, Malaysia recorded a 27% increase in the commercial payments using RMB which also showed that Malaysia’s market has the knowledge about the actual practice of using the RMB in many corporates.
“This underscores how important the currency is embedded in the companies’ treasuries and cash management activities.
“The corporates know the benefit of RMB when the ringgit’s value is low and use RMB to settle their trade not only with China, but also with other counterparts who have settlements in RMB like Japan, Singapore and Hong Kong,” she said at a media briefing on the Development in China and the Internationalisation of the RMB on Friday.
Cheung said by settling using RMB with other counterparts, corporates could also increase their natural hedging opportunities for both sides of the party.
SWIFT also stated that the RMB had been the sixth global payment currency in 2016, which was a promising development for RMB. since 2008.
On China’s One Belt One Road initiative, she said, HSBC was also ready to cooperate with market practitioners as well corporates from China to look into its grand strategy to further integrate into the global economy.
“We are talking about US$60bil worth of project opportunities and in the next one or two years, there will be a lot of attention on how corporates are going to participate in the projects in terms of establishing their treasuries and cash management.
“These are going to be the working capital infrastructure that corporates need to develop and with the right working capital management, they will go a long way,” said Cheung.
She said that the One Belt One Road initiative is an opportunity for Malaysia, being in the heart of South-East Asia.
“In terms of RMB perspective, we are the leading international bank for global RMB business, where we have about US$1.25bil revenue from RMB internationalisation and we are looking into growing that revenue to US$2.2bil in the next few years,” Cheung said. - Bernama