What is Offshore RMB? Understand the Difference Between CNY and CNH in One Minute
📌 Onshore RMB (CNY)
Trading Location: Mainland China (e.g., Shanghai)
Exchange Rate: Managed by the central bank, limited fluctuations (±2%)
Participants: Domestic banks, enterprises, individuals
Usage: Domestic payments, trade, investment
📌 Offshore RMB (CNH)
Trading Location: Outside Mainland China (e.g., Hong Kong, Singapore)
Exchange Rate: Determined by market supply and demand, free float
Participants: Overseas banks, multinational corporations
Usage: Cross-border trade, investment, settlement
🆚 CNY vs CNH: Core Differences
Regulation: CNY is heavily regulated, CNH is market-driven
Exchange Rate: CNY is stable, CNH is highly volatile
Liquidity: CNY is restricted, CNH is more free
💡 Why Separate?
To control capital flows, prevent risks, and promote the internationalization of the RMB.
📊 Impact on Individuals
Currency Exchange: CNY has an annual limit of $50,000 per person, CNH has no limit
Investment: CNY is used for A-shares/wealth management, CNH is used for Hong Kong stocks/offshore bonds
Arbitrage: The exchange rate difference between CNY and CNH can be used for arbitrage
🧩 Real-world Examples
Export companies can choose to settle in onshore or offshore RMB. CNH may earn more but is riskier.
When the Federal Reserve raises interest rates: CNH is easily devalued, CNY is more stable.
🔮 Future Trends
As the internationalization of the RMB progresses, the price difference between CNY and CNH will narrow.
One-Sentence Summary
CNY is the "domestic version" of RMB, stable but restricted;
CNH is the "international version" of RMB, free but highly volatile.
