On April 9, OCBC Bank held a media communication session, attended by several senior executives, to discuss hot topics including the internationalization of the Renminbi, the expansion of Chinese enterprises into Southeast Asia, and the outlook for the Renminbi's exchange rate.

Hong Yongxiang, Chief Executive Officer of OCBC China, stated that over the past decade, Chinese enterprises have increasingly perfected their industrial chain layouts in regions like Southeast Asia. In countries such as Singapore, Malaysia, and Indonesia, a relatively complete ecosystem for Chinese enterprises has already formed.

"Under these circumstances, transactions between companies can be settled directly in Renminbi," Hong Yongxiang pointed out. If both upstream and downstream partners are involved in the Chinese supply chain, using Renminbi can not only reduce reliance on the US dollar but also help hedge exchange rate risks, thereby improving transaction efficiency.

He believes that as Chinese enterprises deepen their global footprint, the internationalization of the Renminbi will become a "natural next step." Concurrently, OCBC Bank is actively exploring the application of the digital Renminbi in cross-border scenarios.

Xie Dongming, Head of Macro Research at OCBC Bank, added that there is a solid foundation for advancing the internationalization of the Renminbi between China and ASEAN. In recent years, regulators have also been continuously promoting the development of relevant mechanisms, such as the bilateral local currency settlement arrangement between the Renminbi and the Indonesian Rupiah.

However, he also noted that compared to the multilateral settlement system of the US dollar, the Renminbi currently primarily relies on bilateral mechanisms, leaving room for improvement in overall efficiency. "Whether it can transition from bilateral to multilateral in the future is a question that needs consideration for the further deepening of the Renminbi's internationalization. But judging from the changes over the past year or two, the trend is already very clear."

Discussing the Renminbi exchange rate, Liu Yang, Deputy President of OCBC China and General Manager of the Global Financial Markets Department, expressed the view that the Renminbi exchange rate still maintains relatively strong underlying support. "The Renminbi exchange rate is fundamentally a system oriented towards domestic conditions, with strong fundamental support, and it remains relatively stable within the central bank's management framework," he said. He indicated that, supported by export demand, the Renminbi exchange rate is still expected to maintain a relatively strong trend within the year.

From the perspective of the yield curve, short-term interest rates in the interbank market have continued to decline since the beginning of this year, having now fallen to a historical low of approximately 1.25%. Liu Yang believes that against this backdrop, the yield curve has shown a trend of steepening over a longer period, meaning long-term interest rates are rising.

He pointed out that this change reflects the market beginning to gradually price in expectations of the Chinese economy exiting deflation. "From a market perspective, the steepening yield curve provides new allocation opportunities for institutional investors."