Reversion to type, or an opportunistic move when Asia traders were thinking about hitting the bars?
Either way, the offshore renminbi has just traded at a weaker level against the dollar than its onshore cousin for only the second time in two months.
For 18 months and counting, the offshore rate has tended to be the weaker of the pair, sending a signal to mainland investors that international markets were betting on further declines, which in turn encouraged the capital outflows China has been battling to contain.
Late on Friday in Hong Kong, the offshore rate weakened to Rmb6.9040 against the dollar while the onshore rate traded at Rmb6.8990.
The fact that the offshore rate has been stronger since January 3, barring a small episode mid-February, has been viewed as part of China’s efforts to limit the pace of the renminbi’s decline.
So far this year, the onshore renminbi has gained 0.6 per cent against the dollar while the offshore rate is up 1.1 per cent.
Since triggering global market turmoil in January 2016, the offshore renminbi market has become increasingly docile, tamed by shrinking liquidity which has raised the costs of betting against the currency.
The People’s Bank of China is widely assumed to intervene in the market but it never confirms (or denies) any action.