CNH becoming de facto new currency in Hong Kong

The decoupling of offshore RMB (CNH) from its onshore counterpart (CNY) as Beijing keeps its capital account closed is creating conditions for CNH to become a currency in its own right.
Tim Condon: RMB views
Tim Condon: RMB views

Offshore renminbi CNH will decouple from its onshore counterpart CNY while Beijing keeps a closed capital account, ING Group’s chief economist, Tim Condon, told an audience in Singapore this week, effectively creating a new currency in Hong Kong.

Speaking during a panel discussion at the RMB Rising conference, jointly hosted by AsianInvestor and FinanceAsia following a similar successful event in Hong Kong, Condon notes that “the huge difference between yields of onshore and offshore RMB bonds is a testimony of capital account restriction in China”.

Currently, offshore RMB bonds are trading at much lower yields compared with their onshore peers. For instance, the five-year Chinese government bond is trading at...

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