CNH - Chinese Yuan (Offshore)

Introduction to Chinese Yuan (offshore)

China is not only the world's second-largest economy but also the largest global player in business and trade activities in the world. Although the Chinese currency is open for transactions, the Chinese Yuan has a distinction between domestic (onshore) and international (offshore) trading. 

The currency used for domestic transactions is called Renminbi (also known as Chinese Yuan), abbreviated as RMB, with the ISO 4217 code CNY. Meanwhile, the CNH is used for transactions in international markets, particularly outside mainland China.

What offshore Chinese Yuan (CNH) can offer

• Easy convertibility: CNH can be easily converted into other currencies in the international market, facilitating trade and investment transactions.

• Open market: CNH is traded freely in the open market and is not regulated by the People's Bank of China like the domestic Chinese Yuan.

• Strong growth: CNH has become one of the most popular currencies in international transactions, especially in trade with China.

History of Chinese Yuan (Offshore)

In 2009, the Chinese government officially lifted restrictions on trade transactions in Renminbi between China and Hong Kong. This marked the first time Renminbi transactions were allowed outside mainland China. This event signified the birth of CNH, where “H” stands for Hong Kong.

After the birth of CNH, China began to internationalize its currency with more relaxed regulations. This eventually leads to the development of the Renminbi market in Hong Kong and other offshore markets such as like Australia, the U.S., Singapore, and the U.K. These markets coexist with the domestic Renminbi market in mainland China, where restrictions on buying and selling still apply. Therefore, there are now two Renminbi markets: offshore and onshore.

Due to China's cross-border monetary policy, the Chinese Renminbi is allowed to trade at different rates in offshore markets such as Hong Kong. To distinguish between these rates, the unofficial abbreviation CNH is used to refer to the offshore price of the Chinese Renminbi (CNY).

What is the difference between CNY and CNH?

There are two types of Renminbi traded in different markets: the domestic Chinese Yuan (CNY) and the offshore Chinese Yuan (CNH). Here are the differences between these two currencies:

The Development of the CNH

In recent years, the offshore Chinese Yuan (CNH) has gained wider acceptance in international trade, with an increasing number of banks and financial institutions offering services related to this currency. The growth of CNH also reflects China’s trend of economic openness and the strengthening of the Yuan’s position in global financial markets.

The offshore Yuan (CNH) is a key instrument in linking China's economy with the world, fostering international trade and investment. The use of this currency is becoming increasingly common, facilitating global trade and financial transactions.