Offshore renminbi in flux after six days of weakening

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The offshore renminbi was in flux on Tuesday after pushing weaker for six straight days – the longest streak since October – and closing out Monday softer than its ostensibly more tightly managed onshore counterpart.

The offshore exchange rate for China’s currency (CNH) was bobbing up and down around the previous day’s close of Rmb6.9055 on Tuesday in Asia, after the previous six sessions brought it a cumulative 0.5 per cent weaker against the dollar.

That is the longest losing streak for the offshore rate since late fall, when it softened for eight straight sessions between September 30 and October 11.

The onshore rate (CNY), which accounts for a vastly larger currency pool and is bound by a trading band whose midpoint is set each morning by the central bank, closed Monday marginally weaker for a fourth straight day at Rmb6.903 – the longest stretch of losses since a five-day softening streak ended on November 14.

The two rates have seen their traditional roles flipped in recent months as the offshore rate, usually viewed as a proxy for international investor sentiment, pushed stronger than the onshore rate. However, Monday saw the offshore rate weaken past its onshore counterpart for much of the day, including nearly the entirety of its second half.

The dollar index measuring the greenback against a basket of peers was off 0.1 per cent on Tuesday at 100.73.

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