Li Zhen, head of Foreign Exchange and Digital Assets at DBS Bank—global award winner for Best FX Services for Banks—discusses what is shaping the future of interbank FX.
Global Finance: Are Asian investors responding to this year’s developments in global trade by moving away from the US dollar as a reserve currency?
Li Zhen: We’re seeing pragmatic diversification by investors to add exposure to selected regional currencies such as the Singapore dollar, the euro, and the renminbi, rather than a wholesale move away from the US dollar. Indicators to watch include the proportion of central bank reserves held in US dollars, the currency composition of Swift international payments, and total external debt issued in US dollars by foreign governments and corporations.
The US dollar will likely remain the anchor of the international monetary system for the foreseeable future, given the depth of US capital markets and the liquidity of dollar funding. The US dollar still accounts for over half of disclosed global FX reserves, albeit drifting lower over the past decade.
GF: Are you seeing a structural shift in how investors approach Asian currencies, given the evolving macro outlook and lower global yields? If so, does providing FX services for these currencies require more-complex execution frameworks?
Zhen: Asian currencies are increasingly being viewed through a structural lens rather than purely as cyclical or carry-trade vehicles. Investors are paying attention to fundamentals such as current account and fiscal position, and Asian economies like Singapore score well on these metrics. Corporates seeking to expand their regional supply chains may also seek to expand local-currency financing to achieve a natural hedge.
As clients engage more deeply in Asian currencies, they will expect the same quality of access they receive in the most liquid pairs. To meet these expectations, DBS leverages its local-market expertise, access to regional liquidity pools, and connectivity with some of the largest Asian currency clearing corridors.
GF: What role are AI and machine learning (ML) playing in improving execution quality, pricing precision, and overall market-making efficiency?
Zhen: AI and ML enable our teams to analyze a larger volume of data and client flows to quote tighter prices for our clients. They are also powerful in surveillance and anomaly detection, flagging unusual price moves or trading patterns in real time.
AI and ML have also transformed the way our corporate sales team engages, prices, and advises our FX clients. We’ve deployed a recommendation-and-analytics engine, Hi-P [hyper personalization] for our sales desk to deliver tailored FX recommendations for clients, depending on their risk profiles and transaction flows.
This empowers our sales desk to move from reactive servicing to proactive and predictive engagement. As such, DBS can provide its over 280,000 institutional clients—from the largest multinational corporation to mom-and-pop enterprises—with a personalized customer experience.
GF: What have been the most significant changes in banks’ expectations around execution quality, price consistency, and market-making responsiveness in FX?
Zhen: Banks increasingly expect pricing engines that are highly resilient, low latency, and high throughput: capable of handling spikes in volume or periods of volatility without widening spreads. At the same time, this must be complemented by frictionless, omnichannel distribution capabilities.
GF: Is algorithmic pricing becoming a differentiator in the interbank market? And how has DBS adapted its internal pricing architecture to this shift?
Zhen: Banks and financial institutions now expect near-continuous, high-quality pricing across a wider range of currency pairs, including Asian crosses.
Algorithmic pricing has become the norm in interbank FX. The differentiator lies in how adaptable these algorithms are. The same underlying market data is broadly available to everyone; so the edge comes from how you curate that data, calibrate your models, and integrate them with risk management. This will play a key role in providing consistency during volatility.
