The difference of liquidity between offshore and onshore will affect the difference of RMB exchange rate. When the liquidity of offshore RMB market deteriorates, the pressure of offshore RMB appreciation rises, and when CNH is stronger than CNY, the spread rises, and vice versa. When the dollar liquidity in the offshore RMB market deteriorates, the pressure of offshore RMB depreciation will increase and the spread may decrease.
Offshore RMB business is RMB deposit business outside China. The business where both parties are non-residents is called offshore financial business.
Extended data:
Precautions:
1. Take the exchange rate quotation difference as the space for future appreciation/depreciation of onshore RMB. Offshore RMB has no foreign exchange control and no central bank to support the market, which can be partially understood as actual value. The control and support of the onshore RMB exchange rate will not last forever, and will eventually move closer to the free market price.
2. If there is no expectation of RMB appreciation, or the RMB is freely convertible, there will be no arbitrage space in the offshore RMB market. But for a long time, the RMB has appreciated, so the RMB in Hong Kong (offshore RMB) has become a best-selling commodity.
3. Under the expectation of depreciation, people who hold RMB in Hong Kong want to change it into US dollars and Hong Kong dollars as soon as possible, and the exchange rate of offshore RMB will be lower than that of onshore RMB. There are many interpretations of the exchange rate difference between the two.
Baidu Encyclopedia-Offshore RMB
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