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The offshore exchange rate for the renminbi strengthened markedly against the dollar following the Fed’s interest rate rise in a rare substantial move for the ostensibly less-managed of the two rates for China’s currency.

Dollar weakness strengthened the offshore renminbi as much as 0.8 per cent against the greenback to Rmb6.8941 following the rate rise. The onshore renminbi, which trades within a 2 per cent band around a daily fix set by the People’s Bank of China, had already closed the day flat against the dollar at Rmb6.9149.

A weaker rate for the offshore renminbi relative to its onshore counterpart would imply international investors are betting on a weaker Chinese currency – a norm that has been reversed for most of 2017. But rates have oscillated this month, surprising observers who had assumed the stronger offshore rate was part of an effort to stem capital outflows.

Analysts have suggested a lack of liquidity in the offshore market may be to blame for swings in the offshore rate.

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