CNH (Offshore RMB)

Offshore Renminbi (CNH) refers to Renminbi traded and circulated in offshore markets (mainly Hong Kong, Singapore, London, etc.), as opposed to onshore Renminbi (CNY). The CNH exchange rate is determined by supply and demand in offshore markets, is more influenced by international factors, and typically has higher volatility than CNY. Use cases include: foreign trade enterprises receiving and paying Renminbi offshore, cross-border trade financing, foreign exchange hedging, investing in offshore Renminbi bonds (dim sum bonds), etc. Precautions: There is a price spread between CNH and CNY, and enterprises need to pay attention to exchange rate risk; when settling cross-border transactions, it is necessary to clarify whether CNH or CNY is used to avoid exchange losses; the CNH market is greatly affected by policies, such as central bank bill issuance, liquidity adjustment, etc. Difference from CNY: CNY is regulated domestically, and its exchange rate has a daily fluctuation limit; CNH floats freely and better reflects market expectations. Difference from foreign currencies such as the US dollar: CNH is essentially Renminbi, but it is priced and settled offshore and applies to non-resident accounts. Foreign trade practitioners should use the CNH market for hedging, but need to pay attention to regulatory changes and liquidity risk.