Yuan will parallel dollar in Asia in 10 to 15 years

Shanghai (CNS) -- The proportion of RMB in the Asian capital market will parallel that of the U.S. dollar in 10 to 15 years, predicted DBS Group CEO Piyush Gupta on Tuesday.

He made the prediction based on positive prospects for the liquidity and potential of the overseas yuan bond market.

The recent drop in deposits of offshore yuan in Hong Kong is not an indication that investors should lose faith in offshore yuan, in the view of Woon-Khien Chia, a specialist in emerging Asian markets at the Royal Bank of Scotland.

The decline, Chia reasons, is likely a result of the increase in Chinese exports traded in yuan, offshore RMB bonds issued since last September, more investments placed with Hong Kong trade settlement banks on the Chinese mainland, and the flow of offshore yuan deposits from Hong Kong to other international offshore centers.

Three banks promised to release their inter-bank lending rate at 11 a.m. daily, as requested by the Treasury Markets Association of Hong Kong.

Meanwhile, the Hong Kong Monetary Authority announced it will relax the rate of required reserves in offshore yuan to 25 percent, and include offshore government bonds as well as mainland bank bonds invested by Hong Kong banks as part of the required reserves. This, in Chia's view, is intended to speed up integration of the short-term offshore RMB market and the mainland market.