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OCBC says cautious in promoting offshore yuan deposits in Singapore

Oversea-Chinese Banking Corp , Singapore’s second-biggest bank, is not aggressively promoting offshore yuan deposits to Singapore customers due to the risk of near-term losses as the local currency is likely to appreciate at a faster pace.

“We’re pretty cautious with regard to offshore RMB business in terms of deposits. For a Singaporean, we think it is not very wise,” CEO David Conner said at an earnings briefing.

“Our forecast has always been that the Singapore dollar will appreciate faster than the renminbi so we are not pushing that hard with our customers.”

OCBC comments came after rival DBS , Southeast Asia’s biggest bank, said in remarks published on Friday that it had sold more than 27 billion yuan ($4.2 billion) of investments linked to the Chinese currency to wealthy investors in the city-state.

The Singapore dollar has gained about 3 percent against the U.S. dollar so far this year, twice the pace of the yuan which strengthened around 1.4 percent against the greenback.

In April, Singapore’s central bank further tightened monetary policy by sanctioning an immediate rise in the value of its dollar, becoming just the latest Asian nation to use currency strength to fight commodity-driven inflation. [ID:nL3E7FE0D7]

Conner said yuan deposits may suit investors who want to shift from U.S. assets because the Chinese currency has room to appreciate against the greenback.

He also said the offshore yuan exchange rates are not very attractive, so investors should be aware of the risks before they invest in offshore yuan products.

OCBC does offer offshore yuan deposits in Singapore along with DBS, United Overseas Bank and HSBC, but it did not disclose how much it has raised. ($1 = 6.492 Chinese Renminbi)

Adapted from: Reuters

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