The onshore renminbi is once again trading at a weaker level against the dollar than its offshore counterpart on Monday, returning to form after the latter began trading at a softer level late last week.

The ostensibly more tightly-regulated onshore rate softened marginally to Rmb6.8923 per dollar on Monday, taking it weaker than the offshore rate, which strengthened 0.1 per cent to Rmb6.8888.

The offshore rate had weakened to Rmb6.9040 against the dollar late on Friday in Hong Kong, while the onshore rate traded at Rmb6.8990. That was only the second time in two months it had weakened past the onshore rate.

Once relied upon as a proxy for international investor sentiment on the renminbi’s prospects, the offshore rate has since been cowed by evaporating liquidity in Hong Kong that has pushed up the cost of betting on the renminbi’s further depreciation against the dollar.

That has in turn taken some of the downward pressure off the onshore renminbi – though foreign exchange data out later this week from the People’s Bank of China will provide a clearer view on whether recent stability in the currency’s dollar exchange rate is due to market sentiment or continued spending of forex reserves by said central bank.

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