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The difference between offshore RMB and onshore RMB
I believe many people have heard of offshore RMB and onshore RMB. Although both are in the form of RMB, what is the difference between them? How do they affect it? Knowing this may help you better understand the investment market.

What's the difference between offshore RMB and onshore RMB?

The main difference lies in the trade settlement of cross-border import and export enterprises. When offshore RMB is weaker than onshore RMB, it will cost 6.7 yuan RMB to exchange 1 USD at home, while it will cost 7 yuan RMB or even more to exchange 1 USD abroad. There is also that onshore financial institutions are not allowed to trade in the offshore RMB market; Offshore financial institutions are also not allowed to conduct any transactions in the onshore RMB market.

Offshore RMB refers to the market outside Chinese mainland where RMB lending business can be conducted. They have a short development time, small scale and few restrictions, which are mainly influenced by international factors and can reflect the supply and demand of RMB in the market more comprehensively.

Onshore RMB is the banking service of domestic companies and individuals that we usually contact. The development time is long, the scale is large, and there will be more controls. The central bank is an important participant in the foreign exchange market, and the exchange rate is greatly influenced by the central bank's policies. Simply put, one is the exchange rate of foreign exchange and the other is the exchange rate of domestic exchange.