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SINGAPORE : Experts said Singapore is expected to eclipse Japan as the largest foreign exchange (FX) trading centre in Asia after the ASEAN economic community is fully integrated by 2015.
In a recent survey by the Bank for International Settlements, Singapore has leap-frogged Switzerland as the world's fourth largest FX centre.
Growth in forex volumes in Singapore is also expected to be sustained in the years ahead.
Official numbers showed that volumes of FX trading have risen 10 per cent in the last three years to S$360 billion per day.
And market watchers said the growth trend is likely to continue.
"Singapore has a good chance of increasing its market share of FX volumes for the reasons of sound financial system. Increased interest and relaxation of FX rules in Asia will encourage higher volumes and higher FX activity, which Singapore is well placed to benefit from," said Thio Chin Loo, senior FX analyst at BNP Paribas.
Industry observers added that Singapore is also well placed to capitalise on the growing foreign capital inflows into Asia.
In particular, ASEAN's share of total global foreign direct investment grew to 3.6 per cent last year. That's up from 2.8 per cent in 2008 and experts said there's more upside ahead.
"The liberalisation processes are part of economic modernisation and Singapore, as it is newly industrialised, has a role to play in facilitating the inflows from the advanced world into the liberalising states such as Malaysia and Indonesia. It's not unlike the role Hong Kong played in the development of China in the last 30 years," said Geoff Howie, Sales and Market Strategist, MF Global Singapore.
Analysts said the continuing shift in interest away from the US dollar into emerging Asia will benefit regional currencies like the Chinese yuan and Malaysian ringgit.
They added that the trading of non-US dollar currencies has so far made up for the shortfall in trading activity for the greenback. - CNA /ls
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