The Impact Of Offshore Market In Onshore Market Is Greatly Enhanced.

Unlike other countries' currencies, which were affected by the US Federal Reserve, the yuan did not depreciate in the shadow of the dollar's strength last week. Instead, the Yuan's entry into the SDR and the Shanghai free trade area will take the lead in achieving the two advantages of capital account liberalization.

Last Friday, both the offshore and offshore prices of the renminbi jumped and rose by more than 300 points, and the offshore market's impact on the offshore market was greatly enhanced.

Taking account of the fact that the domestic and foreign capital pools of foreign-funded enterprises have been opened up before, the threshold of the capital pool has been greatly reduced, and the exit of the renminbi is very convenient. In addition, the central bank has vigorously promoted the internationalization of RMB, and the international stock of RMB has increased rapidly, and the offshore offshore market is rapidly developing into a dominant market.

Unlike the onshore market, the offshore market is no longer the Chinese sovereign market but the third party market. The Central Bank of China has no direct influence on it.

If we want to control the RMB price at that time, we can only become a participant in the market, and we can influence the price by throwing or buying money such as US dollar and RMB, instead of changing the trading rules, freezing capital or raising the market just like the onshore market.

Overnight lending rates to control the market.

In 1997, when Soros and other hedge funds were short of the Hong Kong dollar, the Chinese government of the Hongkong Special Administrative Region finally raised the overnight lending rate to 300%, so that Soros did not have short ammunition and successfully defended the Hong Kong dollar.

This change is conducive to the entry of SDR into the renminbi.

The currency in the basket also means that China is losing its direct control over the pricing of the renminbi. The central bank, as an offshore market participant, may become a loser.

Before the reform in August 11th, there was no doubt that the pricing power of the renminbi was in the domestic onshore market.

Because the central parity of RMB per day is guided by the central bank window, after the reform, it becomes the opening price of the previous day closing price of second days, that is, the pricing of RMB is changed from the central bank plan to the continuous price formation in the market. If the central bank wants to maintain the RMB price, it must sell the US dollar to buy the renminbi like other market participants.

Previously, although there were RMB markets overseas, such as Hongkong's one-year contract NDF and RMB futures CUS, Singapore and Chicago commodity exchanges also tried to develop offshore renminbi market, but their turnover was small and had not been able to become a climate.

After that, the situation has changed rapidly, and the offshore markets are developing rapidly.

Banks, indirectly involved in 140 foreign banks, signed a memorandum of understanding between China Construction Bank and the Chicago commodity exchange (CME) group in October 19th. According to the memorandum, the European exchange of CME will launch an offshore RMB futures contract in London for physical delivery, that is, the formation of the London RMB futures market. In October 20th, the central bank issued 5 billion yuan bonds in London, which means that the RMB bond market in London began to take shape. On the same day, the Bank of China formally launched the London trading center in London, and the Bank of China held RMB three in Beijing, London and Singapore. The index of RMB bonds and the launch of similar index will pave the way for the launch of the RMB index fund. In October 11th, the new RMB settlement system CIPS launched by the central bank was launched, including the 9 foreign direct investment companies, including HSBC and Citigroup.

The offshore market structure of RMB has come into being.