Educational content. This article explains the difference between the onshore and offshore Chinese yuan and why their exchange rates diverge. It does not constitute investment advice or a trading recommendation. CFD trading carries significant risk of loss and may not be suitable for all investors.
China's currency has one name, one central bank and one physical banknote, and two exchange rates. Look up the yuan against the dollar on a trading platform and the symbol is USDCNH; look it up on a bank's rate board in Shanghai and it is USD/CNY. Most days the two sit within a fraction of a percent of each other, and nobody outside a treasury department notices. On the days that matter, when the market's view of the currency changes abruptly, they can separate sharply, and the offshore rate is almost always the one that moves first.
This article explains what CNY and CNH are, why capital controls allow one currency to trade at two prices, how the onshore fixing and trading band work, what widens the gap, and what the offshore quote means for a USDCNH position, using Vanto's published contract data. The wider context of central bank policy and currency pricing is covered in forex central banks explained.
What Is the Difference Between CNY and CNH?
CNY is the Chinese yuan traded inside mainland China under the People's Bank of China's managed exchange rate system, while CNH is the same currency traded outside the mainland, mainly in Hong Kong, at a rate set freely by supply and demand.
| Feature | CNY (onshore) | CNH (offshore) |
|---|---|---|
| Where it trades | Mainland China interbank market | Hong Kong, and other hubs such as Singapore and London |
| How the rate is set | Managed around a daily central parity fixing | Supply and demand, without a band |
| Daily trading limit against the dollar | 2% either side of the fixing | None |
| Access | Mainly onshore institutions; foreign access through approved channels | Open to international participants |
| Convertibility | Restricted by capital controls | Freely convertible within the offshore market |
| Interest rate benchmark | Onshore money market rates | CNH HIBOR, set in Hong Kong |
The currency is the renminbi, which means "the people's currency"; the yuan is its unit. CNY is the international code for the renminbi, and CNH is a market convention for the offshore version, where the H refers to Hong Kong. One CNH buys exactly the same goods as one CNY. What differs is the price at which each can be exchanged for dollars, because the two exchanges happen in two markets that cannot freely trade with each other.
Why One Currency Has Two Exchange Rates
The yuan has two exchange rates because China's capital controls prevent money from moving freely between the onshore and offshore markets, so the arbitrage that would force a single price in an open system can only work partially and slowly.
In an open currency, if the same money traded at two prices in two places, traders would buy it where it was cheap and sell it where it was expensive until the gap closed, usually within seconds. The renminbi cannot be moved in and out of the mainland at will. Companies can settle trade through approved channels, and certain investment programmes connect the two markets, but the flows are licensed and limited. A gap between CNY and CNH therefore persists until those channels, and the policy actions of the authorities, close it.
The offshore market was created deliberately. On 19 July 2010 the People's Bank of China and the Hong Kong Monetary Authority expanded the clearing arrangement for renminbi business in Hong Kong, allowing the currency to be freely deliverable there. The aim was to internationalise the renminbi for trade and investment while keeping control over the domestic financial system. CNH is the result: a pool of yuan held offshore, traded under Hong Kong's open rules, linked to the mainland pool through a controlled pipe.
How the Onshore Rate Is Managed
The onshore rate is managed by the People's Bank of China, which publishes a central parity rate for USD/CNY each trading morning and allows the onshore spot rate to trade no more than 2 percent above or below it during the day.
The central parity, also called the fixing, is announced at 09:15 Beijing time. The band around it was widened from 1 percent to 2 percent in March 2014. The fixing is not a transaction rate, but it anchors the day's trading, and the way it is set has changed several times. The reform of 11 August 2015 tied the fixing more closely to the previous day's closing rate; on 26 May 2017 a counter-cyclical factor was added to the calculation, which the central bank described as a way to dampen herd behaviour, without publishing how it is calculated. A fixing noticeably stronger or weaker than market estimates is read as a signal of the direction the authorities want.
CNH is not bound by the fixing or the band. It trades around the clock with the rest of the foreign exchange market, and it can move beyond the onshore band on a day when the fixing holds CNY in place.
What Makes the Gap Between CNY and CNH Widen
The gap widens when offshore participants expect the yuan to move faster than the onshore rate is allowed to, and when liquidity in the offshore pool changes sharply, and it narrows when the authorities act or the expectation fades.
Three forces do most of the work:
- Expectations. International investors can act on a view about the yuan immediately in the offshore market. When they expect depreciation, they sell CNH and CNH weakens beyond CNY, which is still anchored by the fixing.
- Offshore liquidity. Shorting CNH requires borrowing CNH. When the offshore pool of yuan shrinks, or state-linked banks absorb it, the cost of borrowing rises and short positions become expensive to hold, which pushes CNH back up.
- Policy signals. The fixing, public statements and intervention through state banks affect both rates, but they reach CNY directly and CNH indirectly, so the two can respond at different speeds.
In calm conditions the difference is typically a small fraction of a percent. Under stress it becomes a measure of how far offshore expectations have run ahead of the onshore system.
Three Episodes When the Gap Mattered
The most instructive episodes are the fixing devaluation of August 2015, the offshore liquidity squeeze of January 2016, and the tariff shock of April 2025.
| Date | Event | What happened to CNH |
|---|---|---|
| 11 August 2015 | The PBOC set the USD/CNY fixing nearly 2% weaker than the previous day, the largest move in decades | CNH fell faster than CNY and traded at a marked discount to it, as offshore investors priced further depreciation |
| 12 January 2016 | State-linked banks absorbed offshore yuan liquidity as speculation against the currency built | Overnight CNH HIBOR reached 66.8%, the highest since the benchmark began in 2013, making short CNH positions costly to carry |
| 8 April 2025 | US tariffs on Chinese goods rose to 104%; the PBOC set the fixing weaker than 7.20 per dollar | USD/CNH touched about 7.43, the weakest level for the offshore yuan since the market began in 2010 |
Sources: CNBC, South China Morning Post, Bloomberg, Business Recorder, contemporaneous reporting. Figures rounded.
The January 2016 episode is the clearest illustration of the liquidity channel. The price of the currency did not have to be changed by decree; the cost of betting against it was raised until the bet stopped paying. For a trader holding a short CNH position, which is a long USDCNH position, that cost arrives through financing rather than price.
By 13 September 2026 USD/CNH was quoted around 6.708, roughly 9.7 percent below the April 2025 peak, meaning the offshore yuan had strengthened against the dollar by about that proportion.
Why Forex CFDs Quote CNH, Not CNY
Forex CFDs quote the offshore rate because CNH is the version of the yuan that international participants can freely trade, while the onshore CNY market is accessible mainly to mainland institutions and approved investors.
A CFD price has to be hedgeable and continuous. CNH trades in an open offshore market with deep liquidity during international hours, so it meets both conditions. CNY trades within set onshore hours, within a band, through restricted access. A USDCNH position therefore reflects the offshore rate, and on days when the two diverge, the platform price follows CNH, not the CNY rate quoted by mainland banks.
USDCNH at Vanto: Contract, Pip Value and Swap
At Vanto, one lot of USDCNH is 100,000 US dollars, the profit currency is CNH, one pip is 10 CNH per lot, and on 13 September 2026 a long position received a positive swap while a short position paid a larger negative one.
| Specification | USDCNH at Vanto |
|---|---|
| Contract size | 100,000 USD per lot |
| Profit currency | CNH |
| Quote precision | 5 decimals (one pip = 0.0001) |
| Pip value per lot | 10 CNH, around USD 1.49 at 6.708 |
| Long swap | +23.14 |
| Short swap | -75.57 |
| Triple swap day | Wednesday |
| Minimum volume / step / maximum | 0.01 / 0.01 / 200 lots |
Source: Vanto calculator data, snapshot 2026-09-13, 07:25 UTC. Swaps in the published units for the symbol.
The pip value is the first detail that separates this pair from the majors. On EUR/USD a pip is worth USD 10 per lot; on USDCNH it is worth 10 CNH, about USD 1.49, because the profit is earned in yuan and converted. A move of the same number of pips is worth about a seventh as much, so the volume that corresponds to a given dollar risk is larger. The calculation is explained in what is a pip.
The swap reflects the interest rate gap. US policy rates are well above Chinese ones, so holding dollars against yuan earns the differential and holding yuan against dollars pays it. Splitting the two published figures into their components, as described in why exotic currency pairs cost more to hold overnight, gives a carry component of about 49.35 and a financing spread of about 26.21, a ratio of 0.53 that sits within the range seen across the rest of the forex book. The swap can change, and like every swap it is booked three times on the triple swap day.
Frequently Asked Questions
What is the difference between CNY and CNH?
CNY is the Chinese yuan traded onshore in mainland China, managed around a daily fixing within a 2 percent band; CNH is the same currency traded offshore, mainly in Hong Kong, at a rate set by the market. They are one currency with two exchange rates.
Why is CNH different from CNY?
Capital controls prevent money from moving freely between the onshore and offshore markets, so arbitrage cannot immediately equalise the two prices. Offshore expectations and offshore liquidity can push CNH away from CNY.
Is CNH or CNY more volatile?
CNH is usually more volatile, because it trades without the daily band that limits onshore CNY and responds immediately to international investors' expectations. It tends to move first when the outlook for the yuan changes.
Why do forex brokers quote USD/CNH instead of USD/CNY?
The offshore yuan can be freely traded by international participants around the clock, which allows a broker to price and hedge it continuously. The onshore market is accessible mainly to mainland institutions and trades within set hours and a band.
What is the PBOC fixing?
The fixing, or central parity rate, is the USD/CNY reference rate the People's Bank of China publishes each trading morning at 09:15 Beijing time. The onshore rate may trade up to 2 percent either side of it during the day.
What does CNH HIBOR measure?
CNH HIBOR is the interest rate at which banks lend offshore yuan to each other in Hong Kong. When it rises sharply, borrowing CNH to sell it becomes expensive, which is how offshore liquidity squeezes put pressure on short yuan positions.
Trade USDCNH on Vanto
USDCNH is one of 42 forex pairs on Vanto's MetaTrader 5 platforms, with live swap, contract size and margin for every pair in the trading calculator. The wider structure of the forex book is set out in the forex trading guide, and Hong Kong's own managed exchange rate, which shapes the Hang Seng, is described in how to trade the Hang Seng. A demo account shows how a USDCNH position and its swap behave without risking capital.
Risk warning. Trading securities, futures, options, and contracts for differences are complex financial instruments that require knowledge and understanding. Prices can fluctuate significantly and securities may become valueless. Investors may incur losses exceeding the potential for profits. Trading on margin can result in losses greater than the amount initially deposited. Past performance is not necessarily a guide to future performance. The information in this article is for educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any financial instrument. Consider whether CFD trading is appropriate for your circumstances and seek independent advice if necessary.