Offshore yuan trades weaker than onshore counterpart for third day
Offshore yuan was little changed at 6.9115 per dollar, but trading at a weaker level than onshore yuan’s 6.9051
China’s offshore yuan (CNH) traded at a weaker level than its onshore counterpart (CNY) for a third straight day on Wednesday, as concerns linger the regulatory crackdown on shadow banking will weigh on economic growth.
“Regulators need to better manage market expectations to prevent stoking panic and equities and bonds from persistently tumbling to defend the CNH value,” Scotiabank wrote in a latest research note. “The inverted onshore-offshore dollar/yuan spot gap could swing into positive territory intermittently.”
The People’s Bank of China on Wednesday set the yuan reference rate at 6.9066 to the US dollar, 0.04 per cent weaker than on Tuesday as the dollar index was boosted overnight by buoyant sentiment.
Offshore yuan has been trading at a stronger level than onshore yuan for most of this year, until seeing sporadic inversions in recent weeks.
On Wednesday, offshore yuan was little changed at 6.9115 per dollar, trading at a weaker level than onshore yuan’s 6.9051. Unlike its onshore counterpart which is freely traded without restrictions, offshore yuan has fallen 0.1 per cent this week and broke the closely-watched 6.9 level last Friday, indicating that slight depreciation pressure has re-emerged.
