While reaction to the yuan's almost-certain inclusion in the International Monetary Fund's (IMF) basket of reserve currencies has been muted, the move shows the global economy is getting more diversified, say analysts.
The IMF said last Friday that it has recommended that the Chinese currency be included in the Special Drawing Rights (SDR), alongside the US dollar, euro, pound and yen.
The recommendation means that approval by the fund's executive board on Nov 30 is almost certain as major shareholders have said they will support the inclusion if the yuan meets IMF's criteria.
The SDR serves as a kind of international monetary reserve currency that can be employed to supplement existing currencies, often in times of financial stress. The yuan's inclusion alongside the existing "big four" would be a powerful sign of China's economic rise.
While analysts agree that the yuan's new status is an affirmation of China's efforts in promoting the use of its currency, the near-term impact on Singapore as a yuan hub could be limited.
"The yuan was already a reserve currency before its inclusion in the SDR basket. Major central banks have been increasing their yuan positions at a gradual pace," said OCBC economist Tommy Xie.
"As such, it is unlikely we will see central banks rush to buy yuan-denominated assets upon its principal approval to join the SDR basket," he added.
DBS senior currency economist Philip Wee said China's 13th five-year plan will have a greater impact on yuan transaction activities in Singapore and the region.
"Whether or not the yuan becomes more acceptable is not dependent on its inclusion in the SDR; it depends on the country's fundamentals," said Mr Wee.
He noted that China's "One Belt, One Road" growth strategy, together with a strong yuan, will spur Chinese companies to move to the region.
This will result in more companies moving towards using yuan for trade and investments.
Standard Chartered bank economist Jeff Ng believes the yuan's inclusion in the SDR will boost capital flows in and out of China, creating more demand for the currency.
As third-party yuan trade increases in the region, Singapore, as the biggest offshore yuan centre outside Greater China and an important gateway to South-east Asia, will then stand to benefit, he said.