The offshore renminbi held steady at a weaker level and the onshore exchange rate weakened visibly at the open on Tuesday – despite China’s central bank having set the trading band for the latter stronger.

The People’s Bank of China set the midpoint around which the onshore renminbi (CNY) can trade 2 per cent in either direction at Rmb6.8957 on Tuesday, 0.1 per cent firmer from Monday and marking the first strengthening in four days.

But rather than dragging down the offshore rate (CNH), the onshore renminbi instead appeared to be pulled weaker by it, softening 0.1 per cent to 6.903 per dollar at the open. The onshore rate, which wavered ahead of the fix, pushed marginally softer to Rmb6.9066.

That means – at least of now – that the two rates have seen their traditional roles restored, with the offshore rate, usually viewed as a proxy for international investor sentiment, trending weaker than the onshore rate. Monday saw the offshore rate weaken past its onshore counterpart for much of the day, including nearly the entirety of its second half.

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