What it is
The offshore yuan, designated as CNH, circulates freely in international markets, distinguishing it from the onshore yuan (CNY), which is tightly controlled by China's central bank, the People's Bank of China (PBOC). The CNH rate is determined by market forces, making it more responsive to global supply and demand. This dual-currency system allows China to gradually internationalize its currency while maintaining control over its domestic financial system.
The offshore yuan's exchange rate often serves as an indicator of market sentiment towards China's economy and policies, especially regarding the onshore yuan. News reports frequently compare CNH and CNY rates, with a significant divergence signaling market expectations of future onshore movements or capital flow pressures. Investors follow CNH movements as they can impact the value of Chinese assets, the cost of trade, and the profitability of international businesses dealing with China.
Why it matters
The offshore yuan's value can influence the cost of Chinese goods and investments, providing a market-driven signal about China's economic health and currency stability.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice