What is the Difference between Onshore CNY and Offshore CNY

When we talk about foreign exchange and RMB exchange rate, we often hear two professional terms, one is onshore RMB and the other is offshore RMB. Do you have any doubts: both are RMB, and why should they be divided into onshore and offshore? What is the difference between them?

The Renminbi is the legal tender of the People's Republic of China, and the currency unit is "Yuan" [Yuan] (¥). The common currency codes for the Renminbi are RMB or CNY. In the foreign exchange market, you will also see another currency code for the renminbi which is CNH. The two refer to Onshore Chinese Yuan (CNY) and Offshore Chinese Yuan (CNH).

What is onshore RMB?

Onshore Renminbi - Renminbi business operating in the country. The central bank authorizes the China Foreign Exchange Center to announce the mid-point exchange rate of RMB against USD, EUR, JPY, and HKD on the morning of every working day as the reference price for the exchange rate in the spot foreign exchange market and bank counters. This is called onshore RMB.

What is offshore RMB?

Offshore RMB - Operating RMB business outside of China. The exchange rate at which the central bank opens up Hong Kong and other countries to conduct renminbi transactions is called offshore renminbi. Since Hong Kong is the main trading market for offshore RMB, the H of CNH refers to Hong Kong. Foreign investors generally buy offshore RMB in Hong Kong first, and then trade with mainland companies.

The difference between onshore renminbi and offshore renminbi

In 2010, the Chinese government realized the internationalization of the renminbi and launched the offshore renminbi (CNH). While both are essentially renminbi, they trade at different prices against other currencies.

How to Receive Offshore RMB

If you want to operate an RMB business outside mainland China, you first need to have a bank account that stores, receives, and sends offshore RMB. Epay's online bank account opening service can help companies open a Hong Kong bank account online. Online bank accounts, also known as virtual bank accounts, have the same withdrawal and deposit functions as physical bank accounts, but the account opening process and account management are simpler and more convenient. This Hong Kong bank account is a multi-functional account that can receive HKD, CNH, USD, EUR, and GBP at the same time.

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