CNH becoming de facto new currency in Hong Kong

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...