Deutsche Bank AG confirmed that Singapore is the site of its new world foreign exchange or forex trading engine for the emerging markets. This development comes as the multinational financial services firm and investment bank is reportedly drawn by the Chinese yuan’s increasing significance.
We find this latest report important for our forex traders to read. Deutsche Bank is among the leading international banking institutions, and its activities can considerably influence traders from around the globe.
Based on the news posted online by finance and markets news source Bloomberg, Deutsche Bank is supplanting its international pricing engine for the emerging-market currencies in London with the facility in Singapore. This shift reportedly involves the financial institution being mindful of the Chinese yuan’s growing importance.
China’s official currency accounts for roughly 4 percent of international currency volumes. Moreover, the Chinese yuan or renminbi is the most-traded emerging-market currency, and its trading had reached a daily average worth US$284 billion, per the data released by the Bank for International Settlements (BIS).
All the leading forex centers compete for a larger Chinese yuan trading share, especially as capital inflows into China gain considerable momentum. The Chinese government has also eased investment limitations as a component of broader efforts to transform the Chinese yuan into an international reserve to rival the US dollar.
David Lynne affirmed that Deutsche Bank had witnessed a surge in demand from clients, specifically from China. Deutsche Bank AG’s head of fixed income and currency operations in Asia remarked that these customers want to alter the invoice currency for transactions to Chinese yuan. Lynne also relayed that this trend would continue to gain ground.
Deutsche Bank’s three other global foreign exchange hubs are New York, London, and Tokyo. Besides the Chinese yuan’s rise, the other reason for Deutsche Bank’s move to Singapore is the surging trading in Asia. It emphasized the necessity to locate servers much nearer to clients amid the boom in high-frequency trading. Lynne pointed out that locating new and more powerful computer hardware in Singapore would aid Deutsche Bank in shaving important fractions of seconds from the moment it takes to execute orders in Asia.
We believe that Deutsche Bank’s decision to open a forex trading hub in Singapore is quite reasonable. After all, as an island nation, the Southeast Asian economic powerhouse possesses a speed advantage. Singapore is faster than Tokyo in transmitting foreign exchange pricing into local Asia foreign exchange markets.
Furthermore, we acknowledge Singapore as a truly powerful financial center in Asia. We gathered that it placed third internationally behind the United States and the United Kingdom in the US$6.6-trillion-a-day foreign exchange market, per the BIS’s latest triennial report. Hence, we think that Deutsche Bank’s action is a massive boost for itself, Singapore, and the Chinese yuan, and it will open new opportunities for stakeholders and interested parties later on.