The Singapore Stock Exchange and the Hong Kong Stock Exchange, two of the largest in Asia, have reached an agreement to work together to help the internationalization of the Chinese Yuan, marking a major shift in the currency’s global acceptance.
The two rivals have agreed to promote the Yuan by working with each other on areas such as products and regulatory matters. Both exchanges also said in a joint statement that they will establish a presence in each other’s data center to collaborate on development of new technology.
The new deal comes with recent evidence that the Chinese Yuan is becoming more prominent in international trade, as the currency is now the world’s second most used in trade finance. Swift, a firm that monitors international currency flows, found that importers and exporters used it for 8.7% of their financing agreements in October, up from 4.4% a year earlier.
However, that is a distant second to the U.S. dollar’s 81% share in trade finance. Trade Finance itself is also just a small part of the USD$5.3 trillion a day foreign exchange market.
Analysts from UBS raised its target price for the Hong Kong Stock Exchange’s own shares from HK$123.50 to HK$138 (US$15.93 to US$17.80), but its outlook remained at Neutral.
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