Gary Lin
Gary Lin

Factors shaping increasing confidence in offshore renminbi markets

Chinese renminbi is increasingly being traded outside mainland China as authorities gradually loosen controls over the currency. Gary Lin, head of foreign exchange Hong Kong at Brown Brothers Harriman, talks to e-Forex about the growth of the CNH market.

What is the difference between CNH and the onshore CNY market?  Historically, there were two ways to access RMB currency exposure: the onshore deliverable RMB market and offshore non-deliverable RMB market, often referred to as the CNY non-deliverable forward market. The onshore market is characterised by tight government restrictions, which severely limit trading and investment choices for asset managers outside China. In 2010, the Chinese authorities relaxed regulations around the RMB, prompting the development of a freely traded offshore market, often referred to as the “CNH” market. Initially created to support Chinese firms investing globally, the CNH market has doubled in size since its inception and is now a widely recognised route for international investors to gain exposure to China. CNH is not a different currency from RMB, but rather a term used to refer to the channel that investors outside China can use to access or hedge RMB currency exposure. What factors are driving...continued

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