The difference between onshore and offshore RMB (CNY and CNH)
10 days ago
- #Cross-Border Payments
- #Currency Exchange
- #China Economy
- China is the world’s second largest economy and largest trader in goods.
- The renminbi (RMB) is China’s official currency, with the yuan (CNY) as its principal unit; the terms are interchangeable.
- In 2009, China lifted restrictions on RMB trade settlements, leading to the creation of the offshore yuan (CNH).
- CNY is traded onshore in mainland China with government controls, while CNH is traded offshore with market-determined value.
- China’s capital controls result in different prices for CNY (onshore) and CNH (offshore).
- Transferring CNY to mainland China is complex, requiring detailed documentation and purpose codes.
- Visa Direct offers a 1:1 exchange rate for CNH to CNY payments, avoiding extra FX fees.
- CIPS became mandatory for cross-border CNY payments in 2021, with Visa Direct’s banking partner as a member.
- Visa Direct provides real-time payment tracking via Swift gpi trackers and supports 26 currency conversions to CNH-CNY.
- Companies can hold CNH in multi-currency wallets to hedge against FX risks.