CNY–CNH Spread
The CNY–CNH spread is the difference between the onshore and offshore RMB exchange rates. It can reflect differences in liquidity, market expectations, funding conditions and restrictions on movement between the two markets.
The CNY–CNH spread is usually small, often a fraction of a percent, because arbitrage through permitted cross-border channels keeps the two markets close. It widens when offshore participants expect the currency to move, when offshore liquidity tightens, or when authorities act to steady the onshore rate. The spread is therefore a useful signal of market stress as well as a cost.
For an importer, the spread matters because it decides which conversion is cheaper. If offshore CNH is weaker than onshore CNY, buying renminbi offshore and paying in RMB can cost less than paying in dollars and letting the supplier convert onshore. When the gap reverses, so does the comparison. The effect is small on a single payment but adds up across a year of recurring supplier invoices.
The spread is not the same as a provider's margin. Your executable rate will include the provider's own FX spread on top of whichever market it buys from. When comparing quotes, separate the two: which market is the quote based on, and what margin is the provider adding to it. A provider that quotes an attractive market but adds a wide margin can end up more expensive than one that quotes the less favorable market with a narrow margin.
In practice
The CNY–CNH spread changes daily and can reverse. A route that was cheaper last quarter may not be cheaper now, so compare executable quotes taken at the same time.
Example
On a given morning, onshore USD/CNY is 7.1000 and offshore USD/CNH is 7.1150. For RMB 3,000,000, buying offshore costs about USD 421,650; buying at the onshore rate would cost about USD 422,535. The roughly USD 890 difference is the spread at work, before either provider's margin.
Commonly confused with
| Term | How it differs |
|---|---|
| FX spread | The CNY–CNH spread is the gap between two markets; an FX spread is the margin a provider adds between a reference rate and the rate it gives you. |
See also
- CNYCNY is the official ISO 4217 currency code for renminbi. In financial-market discussions, CNY also commonly refers to the onshore RMB market and exchange rate inside Mainland China.
- CNHCNH is the market convention used to identify renminbi traded and held outside Mainland China, particularly in Hong Kong. CNH is not a separate sovereign currency or an independent ISO 4217 currency code.
- Onshore RMBOnshore RMB refers to renminbi circulating within Mainland China’s domestic banking and financial system. It is generally associated with CNY pricing, Mainland liquidity and China’s foreign-exchange and capital-control framework.
- Offshore RMBOffshore RMB is renminbi held, traded or financed outside Mainland China, most prominently in Hong Kong. It gives international businesses access to RMB liquidity, but it does not provide unrestricted access to Mainland accounts.
- FX SpreadStrictly, the FX spread is the bid/ask spread: the gap between the price at which a currency can be bought and the price at which it can be sold at the same moment. It is a property of the market and of liquidity in that pair.