What it means
CNY is the onshore Chinese yuan, traded only inside mainland China with the PBoC controlling the daily fixing and a ±2% trading band around it. CNH is the offshore yuan, traded in Hong Kong and other offshore centres, free to deviate from PBoC fixing levels. Same underlying currency, two parallel markets with separate prices — connected by limited cross-border flows.
Why it matters
The CNY-CNH spread is one of the cleanest forward indicators of capital-flight pressure and devaluation expectations. When offshore CNH trades materially weaker than onshore CNY (>0.3% gap), the market is pricing devaluation that PBoC isn't yet allowing. The 2015 and 2018 yuan crises were both telegraphed by widening CNH-CNY spreads weeks before the policy change.
How to use it
Track the CNH-CNY gap as a real-time tension gauge on Chinese FX policy. Combine with PBoC daily fixings (released ~09:15 Beijing time) to read whether the central bank is leaning hawkish (stronger fixing than market) or dovish (weaker fixing).
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