Chinese Yuan

• The People’s Bank of China (PBoC) is China’s central bank, responsible for maintaining monetary stability and promoting the country’s economic growth.
• Price setting method: The Renminbi is the only Chinese currency: there are, however, two separate quotation markets. The CNY (Onshore Yuan) is traded only in mainland China, and Chinese authorities manage the value of the CNY relative to a basket of currencies. The CNH (Yuan Offshore) is only traded outside of China, and its value follows that of the CNY, with relatively small differences to the up- or down-side, as a result of supply and demand in the market.
• Note: transfers are always made in CNY. The CNH does not exist in the banking network as a separate currency the denomination refers to Yuan once they are traded offshore (the H is CNH refers to Hong Kong).

• The CNH spot market only developed from 2010: it has been experiencing a meteoric rise.
• In 2016, according to SWIFT, the CNH was the fifth most used currency in international payments. Also, note that London is the second-largest market for CNH (after Hong Kong). However, since then, it didn’t advance much further in usage as many Chinese companies trade in US, EUR or other currencies.

As local players don’t always get attractive FX rates, it can be better for European companies to pay or invoice in CNH and hedge themselves, compared to have the Chinese counterpart handle the FX flows.

• One could also encounter the notations CNO (onshore CNY) and RMB (renminbi, the Chinese word for “money“).

• The value of the CNH is closely correlated with that of the CNY, although ifferences may appear at certain specific periods (e.g. market tensions, PBoC decisions)

There are no special restrictions on the purchase and sale of CNH.