RMB retail products

Other banks in the local market have also been racing to launch RMB retail products recently. HSBC Singapore launched its suite of RMB savings and time deposit accounts in January to the needs of wealthy customers, followed by Singapore's largest bank DBS Bank in Feburary and the second and third largest banks OCBC and UOB in March.

HSBC Singapore said it has raised 1.4 billion yuan (212.8 million U.S. dollars) by March 10.

"We anticipated pent-up demand for the RMB from customers but still, the response has exceeded our expectations," said Greg Zeeman, head of personal financial services at HSBC Singapore.

"We see good growth potential in the outlook for RMB- denominated investments, given that demand and access to the currency is rising rapidly," he said.

The bank said the development of RMB trade settlement in the region is also accelerating at a faster than expected pace and more clients in Singapore "are in active discussions with us on financing their trade in RMB."

On a wider front, RMB as percentage of Hong Kong's total deposit base has grown from below 1 percent to more than 5 percent in the second half of 2010, and the number of new RMB bond issues in 2010 exceeded the total number of bond issuances in the preceding three years, the bank said.

RMB-dominated bonds

In yet another sign of the deepening of the RMB market in Singapore, the banks are also offering or planning to offer access to RMB-denominated bonds.

The growth of both money supply and the bond market is essential to the deepening of the market for any given currency.

HSBC Global Asset Management has launched a RMB Bond Fund for accredited investors in Singapore and Hong Kong. The fund has collectively raised 400 million U.S. dollars in Hong Kong and Singapore by late Feburary.

"Another important driver for the development of the offshore yuan market is the deepening of the offshore yuan bond market," said Daniel Hui, senior foreign exchange strategist at HSBC Global Research.

"We would expect the bond market to grow at the pace of offshore yuan supply growth. We also foresee demand for offshore yuan bond issuance from both onshore companies and multinationals, " he added.

Both UOB and OCBC said they planned to offer offshore RMB- denominated bonds by the end of March for retail investors in Singapore. UOB said its fund aims to generate fixed income returns and benefit from the potential appreciation of yuan over the medium term by investing primarily in offshore RMB debt securities and bonds.

DBS also said last month it planned to launch access to the Hong Kong yuan-denominated bonds from Singapore in the weeks ahead.